Title: Visiting Nurse Ass’n of Fla., Inc. v. Jupiter Med. Ctr., Inc.
Citation: N/A
Docket Number: SC11-2468
State: Florida
Issuer: Florida Supreme Court
Date: July 10, 2014

Supreme Court of Florida 
 
 
____________ 
 
No. SC11-2468 
____________ 
 
VISITING NURSE ASSOCIATION OF FLORIDA, INC., 
Petitioner, 
 
vs. 
 
JUPITER MEDICAL CENTER, INC.  
Respondent. 
 
[November 6, 2014] 
 
REVISED OPINION 
 
 
LABARGA, C.J. 
 
Visiting Nurse Association of Florida, Inc., seeks review of the decision of 
the Fourth District Court of Appeal in Jupiter Medical Center, Inc. v. Visiting 
Nurse Ass’n of Florida, Inc., 72 So. 3d 184 (Fla. 4th DCA 2011), on the ground 
that it expressly and directly conflicts with a decision of the Fifth District Court of 
Appeal in Commercial Interiors Corp. of Boca Raton v. Pinkerton & Laws, Inc., 19 
So. 3d 1062 (Fla. 5th DCA 2009), on a question of law.  We have jurisdiction.  See 
art. V, § 3(b)(3), Fla. Const.  For the following reasons, we quash the Fourth 
 
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District’s decision holding that a court must determine whether a contract is legal 
prior to enforcing an arbitral award based on the contract.      
I.  FACTUAL AND PROCEDURAL BACKGROUND 
A.  Overview 
After the conclusion of an arbitration proceeding resolving a contract dispute 
between Visiting Nurse Association, Inc. (VNA), a home health care agency, and 
Jupiter Medical Center, Inc. (JMC), a hospital, involving agreed-upon discharge 
planning procedures and VNA’s lease of office space in JMC’s hospital, the 
arbitration panel issued an “interim award,” granting VNA damages, prejudgment 
interest on a portion of the damages, and reserving jurisdiction to consider 
attorney’s fees and costs.  In a “Final Award of Arbitrators,” the arbitration panel 
granted VNA attorney’s fees, administrative filing fees and expenses, and 
arbitrators’ fees and expenses.       
After the “interim award” was issued, JMC filed a motion for 
reconsideration and a motion to reopen the hearing, alleging that the arbitration 
panel construed the contract and the discharge planning procedures in violation of 
federal and state health care laws prohibiting kickbacks for referrals of Medicare 
patients.  The panel summarily denied the motion by e-mail stating that it had 
already considered those arguments.  Jupiter Medical Center subsequently filed a 
motion to vacate the arbitration award in the Circuit Court of the Fifteenth Judicial 
 
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Circuit in and for Palm Beach County, Florida, alleging that the arbitration panel 
interpreted the contract to be an unlawful agreement and that the panel exceeded its 
powers.1  Visiting Nurse Association also filed a motion to enforce the award.  At 
the conclusion of a hearing regarding both motions, the circuit court dismissed the 
motion to vacate and granted the motion to enforce the award.  
On appeal, the Fourth District noted that the trial court did not address the 
issue of the contract’s legality prior to dismissing the action.  The Fourth District 
ultimately reversed the dismissal of the motion to vacate the award and remanded 
for the trial court to consider the legality of the contract because “a Florida court 
cannot enforce an illegal contract” and must make that determination prior to 
enforcing an award based thereon.  Visiting Nurse Association then filed a petition 
to invoke this Court’s discretionary jurisdiction, and we granted review.  The 
circumstances leading to the contractual dispute, the arbitration award, and this 
Court’s review of Jupiter Medical Center are more fully set forth below.   
B.  Contractual Relationship and Breach 
This action arises from the February 2005 purchase of a hospital-based home 
health care agency (HHA) by VNA from JMC.  In 2004, VNA approached JMC to 
                                          
 
 
1.  During the arguments on the motion to dismiss, counsel for JMC argued 
that the contract is legal according to its language, but the arbitration award was 
based on JMC not making future Medicare referrals to VNA, which would have 
been illegal.  Thus, according to JMC’s argument below, “it is the method in which 
the arbitrators construed the agreement” that renders the contract illegal.   
 
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purchase JMC’s in-house HHA believing that if it streamlined JMC’s current 
operations, VNA could generate $1.5 million of revenue due to the volume of 
Medicare patients serviced by JMC.  Visiting Nurse Association’s purchase 
decision was based on the belief that it would receive forty-five to fifty Medicare 
referrals per month.  Despite a purchase evaluation revealing significant 
competition from other HHAs, JMC concluded that its in-house HHA’s fair market 
value was $639,000, which VNA ultimately agreed to pay in cash.  In exchange for 
the $639,000, VNA was to obtain all rights and interests in JMC’s HHA.  The 
agreement also provided that VNA would have “access to the institution” and 
“work space” in the hospital.  This portion of the agreement was then 
memorialized in a separate, contemporaneous “office lease” agreement that 
provided that VNA would occupy space in the discharge planning office until the 
“dissolution of [VNA].”  Further, although VNA did not need the space, it agreed 
to take over 5,000 square feet of JMC’s existing 10-year lease in Jupiter Farms at 
an expense of $375,000, to purchase “JMC’s market share of HHA referrals.”  
Shortly thereafter, VNA noticed a decline in Medicare referrals and attributed it to 
JMC not divulging information about the agreement’s discharge procedures, 
specifically paragraph five of Exhibit “D” of the agreement, to JMC physicians.  In 
Exhibit “D” of the agreement, the discharge planning procedures were outlined as 
follows:   
 
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1.  For any patient requiring home health services post discharge, 
[JMC] will include in the discharge plan a list of home health agencies 
that are available to the patient, that are participating in the Medicare 
program and that serve the geographic area in which the patient 
resides, consistent with the requirements of 42 CFR 42.43, [JMC] will 
update its list at least annually and include home health agencies 
which have requested to be listed by [JMC] and which meet the 
requirements stated herein.   
 
2.  For patients enrolled in managed care organizations, [JMC] 
indicates the availability of home health agencies to individuals and 
entities that have a contract with the managed care organization.   
 
3.  [JMC] will document in the patient’s medical record that the list 
was presented to the patient or to an individual acting on the patient’s 
behalf.   
 
4.  [JMC] will inform the patient or the patient’s family of their 
freedom to choose among participating Medicare home health 
agencies and will, when possible, respect patient and family 
preferences, when they are expressed to [JMC].  [JMC] will not 
specify or otherwise limit the qualified providers that are available to 
the patient.   
 
5.  If, after following the foregoing procedures, the patient expresses 
no preference, [JMC] will inform the patient of its relationship with 
the VNA.  The purpose of establishing a working relationship with the 
VNA is to facilitate the smooth transfer of patients into post-hospital 
care and thereby reduce the average length of stay for hospitalization.   
 
(Some emphasis added).  
 
Around November 2006, VNA suspected that a rotation system was being 
used where each patient who did not express a preference for a particular HHA 
was simply assigned to the next HHA on JMC’s HHA list.  Jupiter Medical Center 
denied there was a rotation system in place.  At the evidentiary hearing, however, a 
 
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former JMC discharge planner said a rotation system had indeed been implemented 
and VNA was only mentioned if the patient had previously been provided services 
by JMC’s HHA prior to its sale to VNA.  On June 4, 2007, VNA notified JMC that 
it would not renew the Jupiter Farms lease after its expiration.  Approximately a 
week later, Chief Medical Officer Dr. Ketterhagen was hired, and he directed the 
discharge planning department to continue its rotation system to ensure equal 
distribution of HHA referrals.  Pursuant to these directions, if a patient did not 
express a preference for a particular HHA, JMC referred the patient to the next 
HHA on JMC’s list because Dr. Ketterhagen did not believe JMC was allowed to 
demonstrate a preference to any particular HHA.     
 
On September 10, 2007, Dr. Ketterhagen informed VNA that due to a 
shortage of office space, VNA could not continue to maintain office space in the 
hospital.  In this notice, Dr. Ketterhagen also informed VNA that JMC would no 
longer notify patients of its relationship with VNA.  In September 2007, in 
accordance with its previous notice to JMC, VNA did not make a rent payment for 
the Jupiter Farms office space.  Jupiter Medical Center filed suit in circuit court 
and VNA instituted arbitration proceedings on November 1, 2007.  Neither party 
argued that the contractual arrangement itself was illegal during the arbitration 
proceedings.   
 
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C.  Arbitration Awards 
 
 
The arbitration panel issued an “interim award” in which the panel found 
that JMC breached the contract in two material respects.  First, JMC never made its 
staff aware of the discharge planning procedures outlined in Exhibit “D” of the 
agreement; the closest JMC ever came to complying with provision 5 of Exhibit 
“D” was informing former patients of JMC’s HHA that VNA had purchased the 
HHA.  Further, the facts demonstrated that JMC continued its use of a rotation 
system, which deprived VNA of “what it had paid $639,000 for: the ability to 
subtly ‘nudge’ JMC’s patients to select its agency from among a host of choices.”2  
Notably, the panel did not conclude that JMC breached the agreement by failing to 
refer patients, but only for failing to follow the discharge procedures.  The panel 
also found that even if JMC’s equivocation in following the discharge procedures 
was not a breach of contract, the September 10, 2007, letter from JMC to VNA 
terminating the in-house lease agreement and announcing its intention to cease 
explaining its relationship with VNA to patients did constitute a breach.   
Second, JMC breached the agreement by terminating VNA’s lease 
agreement that provided VNA with office space inside JMC and access to the 
                                          
 
 
2.  The panel clarified that the use of the term “nudge” was in reference to 
the nudge theory that is well known in behavioral economics and defined as the 
“harmless engineering that attracts a person’s attention and alters behavior.”  The 
example provided is when vegetables are placed in a more prominent place on a 
table than junk food.   
 
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discharge planning staff.  The panel concluded that the office space gave VNA 
visibility and access to doctors and other referrers in the hospital; without the 
space, VNA was on equal footing with other HHAs, which was not the benefit 
VNA purchased.       
 
Regarding damages, the panel noted that calculation of damages was 
difficult because the evidence presented showed a drop in Medicare referrals, 
increased competition from other HHAs, and that VNA’s business plan failed to 
account for loss of referrals due to patient choice or doctor referral to a competitor.  
Further, the evidence showed that VNA lost a substantial amount of business 
because of referrals by two surgeons to a competing HHA and the termination of a 
popular admissions coordinator, which upset many doctors.  The panel also 
recognized that VNA failed to account for the work it would take to establish the 
relationships that JMC’s HHA had acquired with hospital staff over the course of 
twenty years.  Moreover, VNA experienced a similar decline in revenue at another 
hospital and did not demonstrate that JMC itself would not have experienced the 
same drop in referrals had it not sold the HHA to VNA.  Thus, based on the above, 
the arbitration panel concluded that VNA’s damages should be reduced from 
VNA’s projected revenue of $1.5 million per year to $1.125 million due to the 
historical 25% drop in Medicare census that would have occurred even if VNA 
received all of the Medicare referrals.  Further, the damages were reduced by the 
 
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approximately 60% loss of referrals to competitors for a total of $450,000 for three 
years, which, when reduced to present value, totals $1,251,213.3  The panel also 
awarded VNA prejudgment interest on $900,000 and reserved jurisdiction to 
consider attorney’s fees and costs.4   
 
Shortly thereafter the panel issued a “Final Award of Arbitrators” in which it 
granted VNA $214,047.50 in attorney’s fees; $16,550 in administrative filing fees 
and expenses; and $71,780.07 in arbitrators’ fees and expenses to be borne entirely 
by JMC.  Jupiter Medical Center was also required to reimburse VNA $49,890.05 
for fees and expenses previously incurred by VNA.  The arbitration panel later 
issued an order clarifying the final award to adopt and incorporate the “interim 
award.” 
                                          
 
 
3.  Stated another way, the panel determined that VNA did not purchase a 
guaranteed amount of referrals because it reduced VNA’s projected revenue by the 
“historical” 25% drop in Medicare census and another 60% to account for losses of 
referrals due to patient choice or doctor’s preference of another HHA.  Thus, the 
panel calculated damages based on what it appears to have considered a more 
reasonable projection of anticipated patient volume.    
 
4.  The panel further noted that the “Interim Award is in full settlement of all 
claims on the merits submitted to this arbitration.  This Award shall remain in full 
force and effect until such time as a final award is rendered.”  The panel indicated 
it would issue a final award within thirty days after a hearing on attorney’s fees and 
costs. 
 
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D.  Jupiter Medical Center’s Challenges to the Arbitration Award 
 
After the “interim award,” JMC filed a motion for reconsideration arguing 
that the arbitration panel did not have a factual basis to reach its decision and did 
not base its conclusions on the four corners of the agreement.  Jupiter Medical 
Center then filed a formal application and request to reopen the arbitration hearing 
contending that the proceeding needed to be reopened to allow for testimony and 
evidence concerning the illegality and serious regulatory concerns resulting from 
the panel’s proposed construction and interpretation of the contract.  Specifically, 
JMC argued that the arbitration panel issued the award based on an erroneous 
construction of the parties’ purchase agreement as an unlawful agreement to make, 
influence, and steer future patient referrals to VNA in exchange for remuneration 
in direct violation of multiple state and federal healthcare laws and regulations, 
including Florida’s Anti-Kickback Statutes (§§ 456.054 and 395.0185, Fla. Stat. 
(2009)); the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)); Medicare 
Hospital Condition of participation; Discharge planning (42 C.F.R. § 482.43); 
Florida’s Patient Brokering Act (§ 817.505, Fla. Stat. (2009)); and the Federal 
Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a).  Jupiter Medical Center 
cited examples of how the award construed the contract in an illegal manner, to 
wit: the arbitration panel found that VNA based its decision to purchase on 
receiving a certain amount of referrals; VNA agreed to take over the remaining 
 
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three years of JMC’s lease to purchase JMC’s market share of referrals; and the 
damage award was based on a calculation solely involving illegally promised 
future Medicare patient referrals from JMC.  The panel issued an order via e-mail 
denying JMC’s motion to reopen the hearing because the panel “considered the 
matters stated in the motion in its deliberations.”   
 
Jupiter Medical Center then filed a motion to vacate the arbitration award in 
the United States District Court for the Southern District of Florida asserting that 
the award should be vacated because the award impermissibly construed the 
parties’ contract in a manner that violated multiple federal laws, regulations, and 
specific, well-defined public policy; and the panel exceeded its powers by 
contravening the express contractual limitations imposed by the parties’ contract 
and by issuing an award in violation of federal laws, rules, and regulations.  The 
federal district court issued an order granting VNA’s motion to dismiss for lack of 
subject matter jurisdiction, in which the court noted that JMC’s right to relief was 
not dependent on resolution of federal law, but rather only whether the panel 
properly interpreted and construed the agreement.   
 
While the motion was pending in federal court and before the panel issued 
the “Final Award of Arbitrators” and the subsequent clarification order, JMC filed 
a motion to vacate the arbitration award in the Fifteenth Judicial Circuit Court in 
and for Palm Beach County.  Shortly thereafter JMC filed an amended motion to 
 
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vacate the arbitration award in the circuit court alleging that the arbitration panel 
interpreted the contract to be an unlawful agreement and that the panel exceeded its 
powers.  The circuit court dismissed the motion to vacate and granted the motion to 
enforce the award without explanation or analysis.5       
On appeal, the Fourth District began its analysis by noting that illegality of a 
contract is a compelling reason not to enforce a contract, citing several cases from 
Florida courts indicating a refusal to enforce illegal contracts.  The district court 
then acknowledged that section 682.13(1), Florida Statutes (2009), clearly does not 
include illegality of a contract as a basis to vacate an arbitral award.  Nevertheless, 
the Fourth District held that “[w]hen the issue of a contract’s legality is raised, the 
trial court must make that determination prior to deciding whether to enforce an 
arbitral award based thereon.”  Jupiter Med. Ctr., 72 So. 3d at 187.  The Fourth 
District reasoned that the arbitral award was based on a breach of contract and that 
a prior arbitration would not prevent the court from vacating an award based on an 
illegal contract.  Visiting Nurse Association then filed a petition to invoke this 
Court’s discretionary jurisdiction arguing that the Fourth District’s decision in 
                                          
 
 
5.  Although the circuit court did not explain its reasoning in the order 
dismissing the motion to vacate, the court appeared concerned with res judicata 
principles (the motion to vacate was previously dismissed from federal court) and 
noted that the argument regarding the illegality of the award appeared 
disingenuous because it was only raised after the contract was construed by the 
arbitration panel. 
 
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Jupiter Medical Center expressly and directly conflicts with the Fifth District’s 
decision in Commercial Interiors.   
E.  CONFLICT 
 
In Commercial Interiors, an arbitrator presided over a dispute involving two 
subcontracts between Commercial Interiors Corporation of Boca Raton 
(Commercial Interiors) and Pinkerton & Laws, Inc. (Pinkerton).  Commercial 
Interiors, 19 So. 3d at 1063.  As part of the subcontracts, which contained an 
arbitration provision, Commercial Interiors agreed to provide interior painting and 
other extra work on a hotel being constructed by Pinkerton.  Id.  Commercial 
Interiors eventually brought suit claiming that Pinkerton had failed to pay it 
$51,209 for work done according to the subcontracts.  Pinkerton filed a motion to 
compel arbitration and the case moved to arbitration.  Id.   
 
Once the arbitration proceedings were initiated, Pinkerton filed a motion to 
dismiss the claim alleging that Commercial Interiors was not entitled to payment 
because the subcontracts were illegal—Commercial Interiors did not have a 
contractor’s license.  The arbitrator ruled that although Commercial Interiors may 
have violated a local ordinance, it had not violated section 489.128, Florida 
Statutes (2002), which is titled “Contracts performed by unlicensed contractors 
unenforceable.”  Further, the arbitrator ruled that Pinkerton had waived its right to 
assert the subcontracts were illegal.  Id.  Pinkerton then filed a motion to set aside 
 
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or vacate the order in the trial court.  The trial court entered an order setting aside 
the arbitrator’s order and dismissed the case with prejudice.  Id.  The trial court 
held that, although it accepted the arbitrator’s findings of fact, the subcontracts 
were not enforceable, and the arbitrator had misapplied section 489.128.  Id.   
 
On appeal, the Fifth District stated that the issue presented was limited to the 
standard a trial court should use in reviewing an arbitrator’s ruling on illegality.   
Id. at 1064.  The Fifth District then noted that if a party failed to establish one of 
the five grounds for vacating an award provided in section 682.13(1), Florida 
Statutes (2007), “neither a circuit court nor a district court of appeal has the 
authority to overturn the award.”  Id. (quoting Schnurmacher Holding, Inc. v. 
Noriega, 542 So. 2d 1327, 1328 (Fla. 1989)).  Applying that rationale to the facts, 
the Fifth District held that none of the narrow grounds to vacate an award were 
present in the case and that the trial court’s order amounted to a simple 
disagreement with the arbitrator’s application of the law to the facts, which was an 
insufficient basis to set aside the arbitration proceeding.  Thus, the conflict issue 
presented is whether the legality of a contract is subject to review on a motion to 
vacate.    
Visiting Nurse Association argues before this Court that the Fourth District 
erred in holding that the trial court must determine whether a contract is legal prior 
to enforcement of an arbitration award because section 682.13(1) sets forth the 
 
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only grounds on which a court shall vacate an arbitration award.  Jupiter Medical 
Center argues that contract illegality is an exception to the statute,6 and the 
arbitrators exceeded their powers pursuant to section 682.13(c).  For the reasons 
discussed below, we resolve the conflict by approving Commercial Interiors and 
disapproving Jupiter Medical Center because courts cannot review an arbitration 
award based on a claim of contract illegality.  Further, we hold that the arbitrators 
did not exceed their powers.7     
II.  ANALYSIS 
A.  Standard of Review 
Visiting Nurse Association contends that it is the arbitrator’s role to decide 
the legality of the contract; JMC, however, contends that a court must decide 
whether a contract is legal prior to enforcement of an arbitral award.  Further, JMC 
contends that the arbitrators exceeded their powers within the meaning of section 
682.13(c).  Thus, the issues presented are pure questions of law, subject to de novo 
                                          
 
 
6.  We note that JMC does not argue that the contract itself is illegal, but 
only that the arbitration panel’s erroneous construction of the contract rendered it 
unlawful.  In short, JMC disagrees with the arbitrator’s application of the law to 
the facts.  Jupiter Medical Center also appears to invite this Court to address the 
legality of the agreement.  However, we do not address the merits of this argument.   
 
7.  Visiting Nurse Association also argued, as a secondary issue, that JMC’s 
motion to vacate was untimely filed and therefore a legal nullity.  We find it 
unnecessary to address this issue in light of our resolution of VNA’s other 
arguments.            
 
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review.  See Shotts v. OP Winter Haven, Inc., 86 So. 3d 456, 461 (Fla. 2011) 
(citing Aills v. Boemi, 29 So. 3d 1105, 1108 (Fla. 2010)).  We now turn to the 
merits.   
B.  Federal Arbitration Act 
 
Neither party noted whether the Federal Arbitration Act (FAA) or the 
Florida Arbitration Code (FAC) applied to this case.  Although the FAA controls 
when a transaction involves interstate commerce, “[i]n Florida, an arbitration 
clause in a contract involving interstate commerce is subject to the [FAC], to the 
extent the FAC is not in conflict with the FAA.”8  See Shotts, 86 So. 3d at 463-64.  
An arbitration clause in a contract not involving interstate commerce is subject to 
the FAC.  O’Keefe Architects, Inc. v. CED Constr. Partners, Ltd., 944 So. 2d 181, 
184 (Fla. 2006).   
To determine if a transaction involved interstate commerce, courts look to 
whether the transaction in fact involved interstate commerce, even if the parties did 
not contemplate an interstate commerce connection.  Allied-Bruce Terminix Cos., 
Inc. v. Dobson, 513 U.S. 265, 281 (1995).  Here, both parties to the contract are 
Florida companies; the purchase agreement involved a home health care agency 
                                          
 
 
8.  The FAA’s enactment demonstrates a national policy favoring 
arbitration, and forecloses state legislative attempts to restrict the enforceability of 
arbitration provisions in agreements.  Preston v. Ferrer, 552 U.S. 346, 353 (2008); 
see also Allied Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 272 (1995). 
 
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with operations in Florida; the lease agreements were for office space in Florida; 
the patients were treated in Florida; and there is no evidence that the patients 
treated were from outside the state.  However, referral of Medicare patients was 
contemplated and occurred as part of the transaction.  Thus, this transaction in fact 
involved interstate commerce and is subject to the FAA.  See THI of N.M. at 
Hobbs Ctr., LLC v. Spradlin, 893 F. Supp. 2d 1172, 1183-84 (D.N.M. 2012) aff’d, 
532 Fed. Appx. 813 (10th Cir. 2013) (holding that a disputed transaction involved 
interstate commerce where Medicare paid for a portion of care and the hospital 
received payment from the New Mexico Medicaid Program, a substantial portion 
of which is funded by the federal government); Canyon Sudar Partners, LLC v. 
Cole ex rel. Haynie, CIV. A. 3:10-1001, 2011 WL 1233320 (S.D.W. Va. 2011) 
(holding that the disputed transaction involved interstate commerce where the 
plaintiff alleged, among several other factors, that the health care received was 
paid for by the federal Medicare program and requests for payments were sent to 
South Carolina); Owens v. Coosa Valley Health Care, Inc., 890 So. 2d 983, 987-88 
(Ala. 2004) (holding that the disputed transaction involved interstate commerce 
where one of the factors alleged was that 95% of the income received by the 
nursing home derived from federally funded Medicaid or Medicare); Miller v. 
Cotter, 863 N.E.2d 537, 544 (Mass. 2007) (noting that health care is an activity 
that in the aggregate would represent a general practice subject to federal control 
 
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and holding that “accepting payment from Medicare, a Federal program (which 
there was some evidence of here), constitutes an act in interstate commerce”) 
(citing Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 327 (1991)).  Although the 
FAA provisions control, we also apply the FAC to the facts of this case because, as 
demonstrated below, the FAC is not in conflict with the FAA.  See Shotts, 86 So. 
3d at 463-64; Miller, 863 N.E.2d at 544 (acknowledging that the FAA applies, but 
applying the Massachusetts Arbitration Act because the FAA only preempts state 
law on arbitration where the state act seeks to limit the enforceability of arbitration 
contracts).  We first address federal case law to determine whether a court 
reviewing an arbitral award on a motion to vacate can consider the claim that a 
contract containing an arbitration provision is void for illegality pursuant to the 
FAA. 
1.  Whether a Court Can Consider the Claim that a Contract Containing an 
Arbitration Provision is Void for Illegality 
    
 
The United States Supreme Court has repeatedly observed that “Congress 
enacted the FAA to replace judicial indisposition to arbitration with a ‘national 
policy favoring [it] and plac[ing] arbitration agreements on equal footing with all 
other contracts.’ ”  Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581 
(2008) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443-44 
(2006)).  Section 2 of the FAA “makes contracts to arbitrate ‘valid, irrevocable, 
and enforceable,’ so long as their subject involves ‘commerce.’ ”  Id. at 582 (citing 
 
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9 U.S.C. § 2).  Under the FAA, questions of arbitrability must be resolved “with a 
healthy regard for the federal policy favoring arbitration.”  Volt Info. Scis., Inc. v. 
Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475 (1989).  With these 
principles in mind, in Buckeye, the Supreme Court addressed whether “a court or 
an arbitrator should consider the claim that a contract containing an arbitration 
provision is void for illegality” with regard to section 2 of the FAA.  546 U.S. at 
442. 
 
In Buckeye, the respondents entered into various deferred-payment 
transactions with the petitioner, in which they received cash in exchange for a 
personal check in the amount of the cash plus a finance charge.  For each separate 
transaction they signed a “Deferred Deposit and Disclosure Agreement” 
(Agreement), which included arbitration provisions.  Id.  The respondents brought 
a putative class action, alleging that the petitioner charged usurious interest rates 
and that the agreement violated various Florida lending and consumer-protection 
laws, rendering it criminal on its face.  The petitioner moved to compel arbitration.  
The trial court denied the motion, holding that a court rather than an arbitrator 
should resolve a claim that a contract is illegal and void ab initio.  The Fourth 
District Court of Appeal reversed, holding that because the respondents did not 
challenge the arbitration provision itself, but instead claimed that the entire 
contract was void, the agreement to arbitrate was enforceable, and the question of 
 
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the contract’s legality should go to the arbitrator.  The respondents appealed, and 
this Court reversed “reasoning that to enforce an agreement to arbitrate in a 
contract challenged as unlawful ‘could breathe life into a contract that not only 
violates state law, but also is criminal in nature.’ ”  Id. at 443 (quoting Cardegna v. 
Buckeye Check Cashing, Inc., 894 So. 2d 860, 870 (Fla. 2005) rev’d, 546 U.S. 440 
(2006), and opinion withdrawn, 930 So. 2d 610 (Fla. 2006)).  The United States 
Supreme Court then granted certiorari review.    
 
The Supreme Court began its analysis by noting that Congress enacted the 
FAA to overcome judicial resistance to arbitration.  Id.  It then observed that 
challenges to the validity of arbitration agreements can be divided into two types: 
challenges to the validity of the agreement to arbitrate within the contract; and 
challenges to the contract as a whole, either on a ground that directly affects the 
entire agreement, or on the ground that a provision is illegal, which renders the 
whole contract invalid.  Id.   
The claim brought by the respondents was identified as one of the second 
type of challenges.  The Supreme Court noted that it previously addressed the 
question of “who—court or arbitrator—decides these two types of challenges” in 
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967), 
where it held that federal courts are not permitted to consider challenges to the 
contract as a whole.  Buckeye, 546 U.S. at 444.  Further, in Southland Corp. v. 
 
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Keating, 465 U.S. 1, 12 (1984), it held that the FAA created a body of substantive 
law applicable in state and federal courts.  Thus, Prima Paint and Southland 
answered the question presented by establishing three propositions: “First, as a 
matter of substantive federal arbitration law, an arbitration provision is severable 
from the remainder of the contract.  Second, unless the challenge is to the 
arbitration clause itself, the issue of the contract’s validity is considered by the 
arbitrator in the first instance.  Third, this arbitration law applies in state as well as 
federal courts.”  Buckeye, 546 U.S. at 445-46 (emphasis added).  Applying those 
principles to the facts of the case, the Supreme Court held that a challenge to the 
validity of the contract as a whole, and not specifically to the arbitration clause, 
must go to the arbitrator.  Id. at 446.   
Jupiter Medical Center, however, argues that the Supreme Court’s use of the 
phrase “in the first instance” indicates that it anticipated a subsequent proceeding 
by a court to decide the claim that a contract containing an arbitration provision is 
void for illegality.9  We disagree.  In Buckeye, the issue presented was whether a 
court or arbitrator decides if a contract is void for illegality, not which tribunal has 
                                          
 
 
9.  Jupiter Medical Center also argues that Buckeye, which involved a 
motion to compel arbitration rather than a motion to enforce or vacate an 
arbitration award, is inapposite to the circumstances presented here.  Although a 
motion to compel arbitration is procedurally distinguishable, the determination that 
the issue of a contract’s legality is to be decided by an arbitrator, however, 
necessarily results in circumscribed court review pursuant to 9 U.S.C. § 10 as we 
discuss in the analysis. 
 
- 22 - 
the first opportunity to resolve the claim.10  The Supreme Court discussed the 
import of a determination of who—arbitrator or court—has the authority to decide 
claims arising out of a contract containing an arbitration provision in First Options 
of Chicago, Inc. v. Kaplan:   
Although the question is a narrow one, it has a certain practical 
importance.  That is because a party who has not agreed to arbitrate 
will normally have a right to a court’s decision about the merits of its 
dispute (say, as here, its obligation under a contract).  But, where the 
party has agreed to arbitrate, he or she, in effect, has relinquished 
much of that right’s practical value.  The party still can ask a court to 
review the arbitrator’s decision, but the court will set that decision 
aside only in very unusual circumstances.  See, e.g., 9 U.S.C. § 10 
(award procured by corruption, fraud, or undue means; arbitrator 
exceeded his powers); Wilko v. Swan, 346 U.S. 427, 436-437 (1953) 
(parties bound by arbitrator’s decision not in “manifest disregard” of 
the law), overruled on other grounds, Rodriguez de Quijas v. 
Shearson/American Express, Inc., 490 U.S. 477 (1989).   
 
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (1995) (emphasis 
added).  As First Options makes clear, the Supreme Court’s determination that an 
arbitrator “should consider the claim that a contract containing an arbitration 
provision is void for illegality” limits a party’s right to the circumscribed court 
review provided in 9 U.S.C. § 10.  Buckeye, 546 U.S. at 442.  Thus, we cannot 
                                          
 
 
10.  In addition, the phrase “in the first instance” qualifies the immediately 
preceding portion of the sentence: “the issue of the contract’s validity is considered 
by the arbitrator. . . .”  Thus, in light of the Supreme Court’s broadly stated issue 
and holding, the Supreme Court intended that the arbitrator would consider legality 
of the contract before proceeding to the merits of the contractual dispute as 
opposed to creating an additional layer of review for contract illegality claims.   
 
- 23 - 
read Buckeye as establishing a subsequent de novo court review for contract 
illegality claims in this context.  Such a reading would be inconsistent with the 
Supreme Court’s efforts to avoid interpretations of the FAA that would “ ‘rende[r] 
informal arbitration merely a prelude to a more cumbersome and time-consuming 
judicial review process. . . .’ ”  Hall St., 552 U.S. at 588 (citations omitted).    
 
Despite this apparent legislative limitation on the authority of the courts to 
vacate an arbitral award, JMC argues that a court cannot enforce an arbitration 
panel’s interpretation of a contract if it results in the violation of some well-
defined, dominant public policy that is to be ascertained by “reference to the laws 
and legal precedents and not from general considerations of supposed public 
interests,” citing to authority from various federal courts and the Supreme Court of 
Connecticut.  See United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 
U.S. 29, 42 (1987) (explaining that “[a] court’s refusal to enforce an arbitrator’s 
award . . . because it is contrary to public policy is a specific application of the 
more general doctrine, rooted in common law, that a court may refuse to enforce 
contracts that violate law”); W.R. Grace & Co. v. Local Union 759, Int’l Union of 
the United Rubber, Cork, Linoleum & Plastic Workers, 461 U.S. 757, 766 (1983) 
(“If the contract as interpreted by [the arbitrator] violates some explicit public 
policy, we are obliged to refrain from enforcing it.”); Delta Air Lines, Inc. v. Air 
Line Pilots Ass’n, Int’l, 861 F.2d 665 (11th Cir. 1988); Mercy Hosp., Inc. v. Mass. 
 
- 24 - 
Nurses Ass’n., 429 F.3d 338, 343 (1st Cir. 2005) (noting that an exception to the 
general rule that the arbitrator has the “last word” is that courts may refuse to 
enforce illegal contracts); I.U.B.A.C. Local Union No. 31 v. Anastasi Bros. Corp., 
600 F. Supp. 92, 94-95 (S.D. Fla. 1984) (“While there are sound reasons for 
requiring parties to adhere to the procedures governing arbitration, it is also well-
established that a court may not enforce a contract that is illegal or contrary to 
public policy . . . the legality of the contract clause at issue here must be 
determined before the arbitration award can be enforced.”); State v. AFSCME, 
Council 4, Local 2663, 777 A.2d 169, 178 (Conn. 2001) (explaining that 
Connecticut recognizes a public policy exception to section 52-418, Connecticut 
General Statutes, which mirrors the FAA, because “[w]hen a challenge to the 
arbitrator’s authority is made on public policy grounds . . . the court is not 
concerned with the correctness of the arbitrator’s decision but with the lawfulness 
of enforcing the award.”).  However, these cases did not involve arbitration under 
the FAA and are thus inapplicable to the question of whether extra-statutory 
grounds for invalidating an arbitration award survived the decision in Hall Street in 
cases, such as this one, that are governed by the FAA. 
 
In Hall Street, petitioner Hall Street Associates, L.L.C., and respondent 
Mattel, Inc., initiated litigation in the United States District Court for the District of 
Oregon, but soon reached an impasse on the parties’ indemnification portion of the 
 
- 25 - 
dispute.  The parties offered to submit to arbitration and the District Court was 
amenable.  As a result, the parties drafted an arbitration agreement, approved by 
the District Court and entered as an order, providing the District Court with the 
authority to vacate, modify, or correct any award where the arbitrator’s findings of 
fact were not supported by substantial evidence or where the conclusions of law 
were erroneous.  Hall St., 552 U.S. at 579.   
Arbitration proceedings took place and the arbitrator ruled that Mattel was 
not obligated to indemnify Hall Street.  Hall Street subsequently filed a motion to 
vacate, modify, or correct the arbitration decision on the ground that the 
arbitrator’s decision constituted legal error.  The District Court vacated the award 
based on the standard of review provided in the parties’ contractual agreement.  Id. 
at 580.  After the arbitration decision was revised on remand, each party sought 
modification in the District Court, which largely upheld the award pursuant to the 
same standard of review provided in the parties’ agreement.      
On appeal to the Ninth Circuit Court of Appeals, Mattel argued that the 
arbitration agreement’s provision for judicial review of legal error was 
unenforceable.  The Ninth Circuit reversed in favor of Mattel, instructing the 
District Court to consider the original decision of the arbitrator pursuant to the 
grounds allowable under 9 U.S.C. § 10, or modified or corrected under  
 
- 26 - 
9 U.S.C. § 11.  After the District Court again held for Hall Street, reasoning that 
the arbitration award rested on an implausible interpretation of the lease and thus 
exceeded the arbitrator’s powers, the Ninth Circuit reversed, holding that 
implausibility is not a valid basis for vacatur.  Thus, the Supreme Court granted 
certiorari review to consider whether the grounds for vacatur and modification 
provided by §§ 10 and 11 of the FAA are exclusive or whether the statutory 
grounds may be supplemented by contract.  Id. at 581.     
Title 9 U.S.C. § 10(a) provides in part: 
In any of the following cases the United States court in and for 
the district wherein the award was made may make an order vacating 
the award upon the application of any party to the arbitration— 
(1) where the award was procured by corruption, fraud, or 
undue means; 
(2) where there was evident partiality or corruption in the 
arbitrators, or either of them; 
(3) where the arbitrators were guilty of misconduct in refusing 
to postpone the hearing, upon sufficient cause shown, or in refusing to 
hear evidence pertinent and material to the controversy; or of any 
other misbehavior by which the rights of any party have been 
prejudiced; or 
(4) where the arbitrators exceeded their powers, or so 
imperfectly executed them that a mutual, final, and definite award 
upon the subject matter submitted was not made. 
 
And Title 9 U.S.C. § 11 provides: 
In either of the following cases the United States court in and 
for the district wherein the award was made may make an order 
modifying or correcting the award upon the application of any party to 
the arbitration— 
 
- 27 - 
(a) Where there was an evident material miscalculation of 
figures or an evident material mistake in the description of any person, 
thing, or property referred to in the award. 
(b) Where the arbitrators have awarded upon a matter not 
submitted to them, unless it is a matter not affecting the merits of the 
decision upon the matter submitted. 
(c) Where the award is imperfect in matter of form not affecting 
the merits of the controversy. 
The order may modify and correct the award, so as to effect the 
intent thereof and promote justice between the parties. 
 
Hall St., 552 U.S. at 582 n.4.   
The Supreme Court began its analysis by recognizing that “[t]he Courts of 
Appeals have split over the exclusiveness of these statutory grounds when parties 
take the FAA shortcut to confirm, vacate, or modify an award, with some saying 
the recitations are exclusive, and others regarding them as mere threshold 
provisions open to expansion by agreement.”  Id. at 583.  Hall Street first argued 
that “expandable judicial review authority” has been the law since Wilko v. Swan, 
346 U.S. 427 (1953).  The Supreme Court disagreed.  It noted that although the 
“Wilko Court . . . remarked . . . that ‘[p]ower to vacate an [arbitration] award is 
limited’ . . . and . . . ‘the interpretations of the law by the arbitrators in contrast to 
manifest disregard [of the law] are not subject, in the federal courts, to judicial 
review for error in interpretation,’ ” this statement did not recognize “manifest 
disregard of the law” as an additional ground for vacatur.  Hall St., 552 U.S. at 584 
(quoting Wilko, 346 U.S. at 436-37).  Further, the Supreme Court acknowledged 
that Wilko expressly rejected the concept of general review for an arbitrator’s legal 
 
- 28 - 
errors and noted the vagueness of the Wilko Court’s reference to “manifest 
disregard” of the law.  Hall St., 552 U.S. at 585.  Indeed, the Supreme Court 
suggested that “manifest disregard” of the law could have been a new ground for 
review, reference to § 10 collectively, or reference to only §§ 10(a)(3) or 10(a)(4), 
which are the provisions authorizing vacatur when the arbitrators were guilty of 
misconduct or exceeded their powers.  Id. (citing Mitsubishi Motors Corp. v. Soler 
Chrysler-Plymouth, Inc., 473 U.S. 614, 656 (1985) (Stevens, J., dissenting) 
(“Arbitration awards are only reviewable for manifest disregard of the law, 9 
U.S.C. §§ 10, 207”); Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 
F.3d 987, 997 (9th Cir. 2003)).  
 The Supreme Court then discussed “whether the FAA has textual features at 
odds with enforcing a contract to expand judicial review following the arbitration.”  
Hall St., 552 U.S. at 586.  It ultimately concluded that the  
text compels a reading of the §§ 10 and 11 categories as exclusive.  
To begin with, even if we assumed §§ 10 and 11 could be 
supplemented to some extent, it would stretch basic interpretive 
principles to expand the stated grounds to the point of evidentiary and 
legal review generally.  Sections 10 and 11, after all, address 
egregious departures from the parties’ agreed-upon arbitration: 
“corruption,” “fraud,” “evident partiality,” “misconduct,” 
“misbehavior,” “exceed[ing] . . . powers,” “evident material 
miscalculation,” “evident material mistake,” “award[s] upon a matter 
not submitted”; the only ground with any softer focus is 
“imperfect[ions],” and a court may correct those only if they go to 
“[a] matter of form not affecting the merits.” 
 
 
- 29 - 
Id.  It further reasoned that “it makes more sense to see the three provisions . . . as 
substantiating a national policy favoring arbitration with just the limited review 
needed to maintain arbitration’s essential virtue of resolving disputes 
straightaway.”  Id. at 588.  It then concluded that any other reading “opens the door 
to the full-bore legal and evidentiary appeals that can ‘rende[r] informal arbitration 
merely a prelude to a more cumbersome and time-consuming judicial review 
process,’. . . and bring arbitration theory to grief in post arbitration process.”  Id. 
(citations omitted).  Accordingly, the Supreme Court held that the statutory 
grounds were exclusive and could not be supplemented by contract.  Id. at 584.   
The Supreme Court’s decision in Hall Street, which addressed the parties’ 
ability to expand the statutory bases for vacating an award by contract, but focused 
on the exclusivity of the categories listed, has led to a federal circuit court split 
regarding whether Hall Street prohibits all extra-statutory grounds for vacating an 
award, including judicially created grounds.   
In Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349, 350 (5th Cir. 
2009), the Fifth Circuit Court of Appeals concluded that Hall Street restricts the 
grounds for vacating an award to those set forth in section 10 of the FAA and 
consequently, manifest disregard of the law is no longer an independent ground for 
vacating arbitration awards under the FAA.  The Fifth Circuit reasoned that “[i]n 
the light of Hall Street’s repeated statements that ‘We hold that the statutory 
 
- 30 - 
grounds are exclusive,’ ” it could not be interpreted as applying only to contractual 
expansions of section 10 of the FAA.  The Seventh Circuit has held that “[s]ome 
decisions of this circuit . . . have implied that ‘manifest violation of law’ has some 
different or broader content.  See, e.g., Edstrom Indus., Inc. v. Companion Life Ins. 
Co., 516 F.3d 546, 552 (7th Cir. 2008).  But . . . none survives [Hall Street].”  
Affymax, Inc. v. Ortho-McNeil-Janssen Pharm., Inc., 660 F.3d 281, 285 (7th Cir. 
2011) (holding that manifest disregard of the law is not a ground on which a court 
may reject an abritrator’s award under the FAA).  The Eighth Circuit has also 
found that claims that the arbitrator disregarded the law are not cognizable under 9 
U.S.C. § 10.  Medicine Shoppe Int’l, Inc. v. Turner Invs., Inc., 614 F.3d 485, 489 
(8th Cir. 2010) (“Appellants’ claims, including the claim that the arbitrator 
disregarded the law, are not included among those specifically enumerated in § 10 
and are therefore not cognizable.”).  Finally, the Eleventh Circuit agreed with the 
Fifth Circuit that the categorical language of Hall Street compels the conclusion 
that judicially created bases for vacating an award are no longer valid.  Frazier v. 
CitiFinancial Corp., LLC, 604 F.3d 1313, 1324 (11th Cir. 2010) (citing Hall Street, 
552 U.S. at 586, 589, 590 (“the text compels a reading of the [sections] 10 and 11 
categories as exclusive”; “the statutory text gives us no business to expand the 
statutory grounds”; “[sections] 10 and 11 provide exclusive regimes for the review 
provided by the statute”)).  
 
- 31 - 
 
The Second and Ninth Circuits, on the other hand, treat manifest disregard 
of the law as a judicial interpretation of the district court’s power under section 
10(a)(4) where the arbitrator “exceeded [his] powers” or “so imperfectly executed 
them that a mutual, final, and definite award . . . was not made.”  See Comedy 
Club, Inc. v. Improv W. Assoc., 553 F.3d 1277, 1290 (9th Cir.) (concluding that 
“manifest disregard of the law remains a valid ground for vacatur” because it is 
“shorthand for a statutory ground under the FAA. . . .”), cert. denied, 130 S. Ct. 
145 (2009); Stolt-Nielsen v. Animalfeeds Int’l Corp., 548 F.3d 85, 94 (2d Cir. 
2008) (same), cert. granted, Stolt-Nielsen S.A. v. Animalfeeds Int’l Corp., 129 
S.Ct. 2793 (2009).11  The Sixth Circuit has concluded in an unpublished opinion 
that Hall Street “did not foreclose federal courts’ review for an arbitrator’s 
manifest disregard of the law” because it held only that the FAA prohibits 
contractual expansion of the statutory grounds for vacating an award, but did not 
address whether those grounds could be supplemented judicially.  Coffee Beanery, 
Ltd. v. WW, L.L.C., 300 Fed. Appx. 415, 418-19 (6th Cir. 2008), cert. denied, 130 
S. Ct. 81 (2009).  The Fourth Circuit Court of Appeals also found that “manifest 
disregard continues to exist either as ‘an independent ground for review or as a 
                                          
 
 
11.  The Supreme Court did not decide whether manifest disregard survived 
Hall Street “as an independent ground for review or as a judicial gloss on the 
enumerated grounds for vacatur set forth at 9 U.S.C. § 10.”  Stolt-Nielsen, 559 
U.S. at 672 n.3.   
 
 
- 32 - 
judicial gloss.’ ”12  Wachovia Sec., LLC v. Brand, 671 F.3d 472, 483 (4th Cir. 
2012).  
Like the Fifth, Seventh, Eighth, and Eleventh Circuit Courts of Appeals, we 
are of the view that the FAA bases for vacating or modifying an arbitral award 
cannot be supplemented judicially or contractually after Hall Street.  As the 
Supreme Court noted in Hall Street, “it makes more sense to see the three 
provisions . . . as substantiating a national policy favoring arbitration with just the 
limited review needed to maintain arbitration’s essential virtue of resolving 
disputes straightaway.”13  552 U.S. at 588.  Accordingly, courts cannot review the 
                                          
 
12.  The Third and Tenth Circuits have declined to address this issue.   
Abbott v. Law Office of Patrick J. Mulligan, 440 Fed. Appx. 612, 620 (10th Cir. 
2011) (“But in the absence of firm guidance from the Supreme Court, we decline 
to decide whether the manifest disregard standard should be entirely jettisoned.”); 
Paul Green Sch. of Rock Music Franchising, L.L.C. v. Smith, 389 Fed. Appx. 172, 
177 (3d Cir. 2010) (unpublished) (citing Bapu v. Choice Hotels Int’l Inc., 371 Fed. 
Appx. 306 (3d Cir. 2010) (unpublished); Andorra Servs. Inc. v. Venfleet, Ltd., 355 
Fed. Appx. 622, 627 (3d Cir. 2009) (unpublished)).  Further, although the First 
Circuit briefly addressed the issue in dicta, it chose not to squarely determine 
whether its case law on manifest disregard of the law could be reconciled with Hall 
Street.  See Kashner Davidson Sec. Corp. v. Mscisz, 601 F.3d 19, 22 (1st Cir. 
2010) (citing Ramos-Santiago v. United Parcel Serv., 524 F.3d 120, 124 n.3 (1st 
Cir. 2008) (acknowledging that manifest disregard of the law is not a valid ground 
for vacating or modifying an arbitral award in cases brought under the FAA in 
light of Hall Street, but declining to reach the question of whether Hall Street 
precludes a manifest disregard inquiry in the setting presented)). 
 
 
13.  Further, the Supreme Court suggested that the enumerated grounds for 
vacatur in 9 U.S.C. § 10 are exclusive in First Options.  There, the Supreme Court 
held that if parties contractually agree to submit the question of arbitrability itself 
to arbitration, then “the court should give considerable leeway to the arbitrator, 
 
- 33 - 
claim that an arbitrator’s construction of a contract renders it illegal.  We now turn 
to JMC’s argument that the arbitrators exceeded their powers. 
2.  Whether the Arbitrators Exceeded their Powers 
In Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013), the question 
presented was whether an arbitrator “exceeded [his] powers” pursuant to 9 U.S.C. 
§ 10(a)(4) by finding that the parties’ contract provided for class arbitration.  The 
Supreme Court noted at the outset that “[a] party seeking relief under [9 U.S.C. § 
10(a)(4)] bears a heavy burden.  ‘It is not enough . . . to show that the [arbitrator] 
committed an error—or even a serious error.’ ”  Oxford Health, 133 S. Ct. at 2068 
(quoting Stolt-Nielsen, 559 U.S. at 671).  It further noted that an arbitral decision 
“ ‘even arguably construing or applying the contract’ must stand, regardless of a 
court’s view of its (de)merits” because the parties “ ‘bargained for the arbitrator’s 
construction of their agreement.’ ”  Id. (quoting Eastern Associated Coal Corp. v. 
Mine Workers, 531 U.S. 57, 62 (2000) (quoting Steelworkers v. Enter. Wheel & 
Car Corp., 363 U.S. 593, 599 (1960); Paperworkers v. Misco, Inc., 484 U.S. 29, 38 
(1987); (internal quotation marks omitted))).  Thus, a court has the power to 
overturn an arbitrator’s determination only if “ ‘the arbitrator act[s] outside the 
scope of his contractually delegated authority’—issuing an award that ‘simply 
                                                                                                                                        
setting aside his or her decision only in certain narrow circumstances,” citing 9 
U.S.C. § 10.  First Options, 514 U.S. at 943 (emphasis added). 
 
- 34 - 
reflect[s] [his] own notions of [economic] justice’ rather than ‘draw[ing] its 
essence from the contract.’ ”  Id. (quoting Eastern Associated Coal, 531 U.S. at 62 
(quoting Misco, 484 U.S. at 38)).  Effectively, the Supreme Court narrowed the 
question presented to whether the arbitrator arguably interpreted the parties’ 
contract.  Id.  Accordingly, because the Supreme Court observed that the arbitrator 
twice considered the parties’ contract and decided whether it reflected an 
agreement to permit class proceedings, it held that the arbitrator did not exceed his 
powers.   
The Supreme Court also determined whether an arbitrator exceeded his 
powers in Stolt-Nielsen.  There, it found that an arbitrator did exceed his powers 
by ordering a party to submit to class arbitration.  The Supreme Court reasoned 
that the parties had entered into a stipulation stating that they had never reached an 
agreement on class arbitration, which made clear that the panel’s decision could 
not have been based on the parties’ intent.  Stolt-Nielsen at 673 n.4, 676 (“Th[e] 
stipulation left no room for an inquiry regarding the parties’ intent.”).  The 
Supreme Court concluded that “the panel simply imposed its own conception of 
sound policy” and thus exceeded its powers.  Id. at 675, 677.   
Here, JMC argues that the arbitrators exceeded their powers because the 
panel interpreted the purchase agreement in a manner that would violate state and 
federal laws, regulations, and rules resulting in both civil and criminal penalties.  
 
- 35 - 
Specifically, JMC points to sections 20, 24, and 28 of the purchase agreement, 
which expressly state that the parties were not to construe the discharge planning 
procedures, the purchase price of the home health care agency (HHA), and either 
of the leases as an illegal agreement to make, influence, and steer future patient 
referrals to VNA.  In short, the parties were to interpret the requirements of the 
contract in a manner consistent with state and federal health care laws.  Thus, JMC 
essentially argues that the arbitrators exceeded their powers because they 
interpreted the contract in a manner allegedly inconsistent with the contract’s 
terms.  It is clear from JMC’s argument that it simply disagrees with the panel’s 
construction of the contract rather than alleging that the panel “imposed its own 
conception of sound policy.”  Accordingly, the arbitration panel did not exceed its 
powers pursuant to 9 U.S.C. § 10(a)(4).   
Based on the foregoing, JMC’s claim that the arbitration panel construed the 
contract to be an unlawful agreement is not grounds for review pursuant to 9 
U.S.C. § 10, and the arbitration panel did not otherwise exceed its powers pursuant 
to 9 U.S.C. § 10(a)(4).  Our review of the provisions of the FAC leads us to the 
same conclusion.   
 
- 36 - 
C.  Florida Arbitration Code 
1.  Whether a Court Can Consider the Claim that a Contract Containing an 
Arbitration Provision is Void for Illegality 
 
“When construing a statute, this Court attempts to give effect to the 
Legislature’s intent, looking first to the actual language used in the statute and its 
plain meaning.”  Trinidad v. Fla. Peninsula Ins. Co., 121 So. 3d 433, 439 (Fla. 
2013) (citing Daniels v. Fla. Dep’t of Health, 898 So. 2d 61, 64 (Fla. 2005)).          
“ ‘Where the statute’s language is clear or unambiguous, courts need not employ 
principles of statutory construction to determine and effectuate legislative intent.’ ”  
Trinidad, 121 So. 3d at 439 (quoting Fla. Dep’t of Children & Family Servs. v. 
P.E., 14 So. 3d 228, 234 (Fla. 2009)).    
Section 682.13(1), Florida Statutes (2009), provides:  
(1) Upon application of a party, the court shall vacate an award 
when: 
 
(a) The award was procured by corruption, fraud or other undue 
means. 
(b) There was evident partiality by an arbitrator appointed as a 
neutral or corruption in any of the arbitrators or umpire or misconduct 
prejudicing the rights of any party. 
(c) The arbitrators or the umpire in the course of her or his 
jurisdiction exceeded their powers. 
(d) The arbitrators or the umpire in the course of her or his 
jurisdiction refused to postpone the hearing upon sufficient cause 
being shown therefor or refused to hear evidence material to the 
controversy or otherwise so conducted the hearing, contrary to the 
provisions of s. 682.06, as to prejudice substantially the rights of a 
party. 
 
- 37 - 
(e) There was no agreement or provision for arbitration subject 
to this law, unless the matter was determined in proceedings under 
s. 682.03 and unless the party participated in the arbitration hearing 
without raising the objection. 
 
But the fact that the relief was such that it could not or would not be 
granted by a court of law or equity is not ground for vacating or 
refusing to confirm the award. 
 
§ 682.13(1), Fla. Stat. (2009).  The unambiguous language of section 682.13(1) 
does not include the term “illegality” or require a court to vacate an arbitrator’s 
“illegal construction of the underlying contract.”  Further, the list of circumstances 
set forth in section 682.13(1) is directed at arbitral misconduct or lack of authority, 
and not mere errors of law, or errors of construction or interpretation of a contract.  
Accordingly, although Florida courts are wont to refuse to enforce an illegal 
contract as noted by the Fourth District, the plain language of the statute constrains 
the courts’ authority to vacate awards to the five grounds set forth in section 
682.13(1).  See Jupiter Med. Ctr., 72 So. 3d at 186 (noting case law indicates that 
Florida courts will not enforce an illegal contract).  Indeed, we have previously 
held that section 682.13(1) sets forth the only grounds upon which an award of an 
arbitrator may be vacated.  
 
In Schnurmacher, 542 So. 2d at 1328, a commercial lessor filed a motion to 
vacate an arbitrator’s award finding that the commercial lessor rather than the 
lessee was obligated to pay sales tax on rental payments.  The circuit court 
confirmed the award and the Third District Court of Appeal reversed.  This Court 
 
- 38 - 
held that “in the absence of one of the five factors set forth in [section 682.13], 
neither a trial court nor a district court of appeal has the authority to overturn the 
award” despite the arbitrator’s erroneous interpretation of the statutes governing 
sales tax obligations.  Id.  This Court specifically observed that “it is well settled 
that ‘the award of arbitrators in statutory arbitration proceedings cannot be set 
aside for mere errors of judgment either as to the law or as to the facts; if the award 
is within the scope of the submission, and the arbitrators are not guilty of the acts 
of misconduct set forth in the statute, the award operates as a final and conclusive 
judgment.’ ”  Id. (quoting Cassara v. Wofford, 55 So. 2d 102, 105 (Fla. 1951); and 
citing District School Bd. v. Timoney, 524 So. 2d 1129 (Fla. 5th DCA 1988), 
Prudential-Bache Sec., Inc. v. Shuman, 483 So. 2d 888 (Fla. 3d DCA 1986), 
McDonald v. Hardee Cnty. School Bd., 448 So. 2d 593 (Fla. 2d DCA), rev. denied, 
456 So. 2d 1181 (Fla. 1984), and Newport Motel, Inc. v. Cobin Rest., Inc., 281 So. 
2d 234 (Fla. 3d DCA 1973)); see also Felger v. Mock, 65 So. 3d 625, 626 (Fla. 1st 
DCA 2011) (“Section 682.13(1), Florida Statutes (2009), sets forth the only 
grounds upon which an arbitration award in a statutory arbitration proceeding may 
be vacated. . . .”); Commercial Interiors, 19 So. 3d at 1064 (“We have specifically 
held that in order to vacate an arbitration award a party must establish one of the 
five section 682.13 grounds.”).  Accordingly, section 682.13(1) sets forth the only 
grounds upon which an arbitration award will be vacated and an arbitration panel’s 
 
- 39 - 
alleged construction of a contract to be an unlawful agreement is not one of those 
five grounds.   
 
Jupiter Medical Center, however, argues that there is a public policy 
exception to the statute.  We decline to adopt a public policy exception to the 
statute.  In reaching this conclusion, we are mindful of the hypothetical possibility 
that an arbitration panel could erroneously determine that an agreement is lawful 
and not void for illegality.  Indeed, it was this concern in part that led us to 
determine in Cardegna v. Buckeye Check Cashing, Inc., 894 So. 2d 860 (Fla. 
2005) rev’d and remanded, 546 U.S. 440 (2006) and opinion withdrawn, 930 So. 
2d 610 (Fla. 2006), that a claim that a contract was void for illegality should be 
decided by the courts and not arbitrators.  See Cardegna, 894 So. 2d at 862 
(quoting Party Yards, Inc. v. Templeton, 751 So. 2d 121, 123 (Fla. 5th DCA 2000) 
(indicating a concern with submitting a claim that a contract is void for illegality to 
arbitration because it “could breathe life into a contract that not only violates state 
law, but also is criminal in nature”)).   
Parties to an agreement containing an arbitration provision, however, 
specifically bargained for an arbitrator’s construction and interpretation of the 
agreement as an alternative to litigation in the courts system, as opposed to an 
additional step in the process.  See B.L. Harbert Int’l, LLC v. Hercules Steel Co., 
441 F.3d 905, 907 (11th Cir. 2006) (noting that the “laudatory goals of [arbitration] 
 
- 40 - 
will be achieved only to the extent that courts ensure arbitration is an alternative to 
litigation, not an additional layer in a protracted contest”).  This characteristic of 
arbitration—finality—is perhaps its most prized feature.  For instance, in 
Schnurmacher, this Court stated:   
The reasons underlying the need for finality of arbitration 
awards were expressed in Johnson v. Wells, 72 Fla. 290, 297; 73 So. 
188, 190-91 (1916): 
 
The reason for the high degree of conclusiveness which 
attaches to an award made by arbitrators is that the parties have 
by agreement substituted a tribunal of their own choosing for 
the one provided and established by law, to the end that the 
expense usually incurred by litigation may be avoided and the 
cause speedily and finally determined.  To permit the 
dissatisfied party to set aside the award and invoke the 
judgment of the court upon the merits of the cause would be to 
render it merely a step in the settlement of the controversy, 
instead of a final determination of it.   
 
These reasons, articulated by this Court over seventy years ago, 
remain relevant under today’s arbitration legislation.  As petitioner 
notes, the finality and enforceable nature of an arbitration award is a 
characteristic of arbitration that distinguishes it from other forms of 
alternative dispute resolution.  To allow judicial review of the merits 
of an arbitration award for any reasons other than those stated in 
section 682.13(1) would undermine the purpose of settling disputes 
through arbitration.  We find it incumbent to adhere to the long-
standing principle of finality of arbitration awards in order to preserve 
the integrity of the arbitration process as a means of alternative 
dispute resolution. 
 
Schnurmacher, 542 So. 2d at 1328-29 (emphasis added).  Here, the parties to the 
agreement received the benefit of their bargain—arbitral construction of the 
 
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agreement as opposed to litigation in the courts system.14  Thus, we decline to 
adopt a public policy exception under these circumstances because such an 
exception would evince resistance to arbitration and deprive the parties of perhaps 
arbitration’s ultimate benefit of finality.  See id. at 1329. 
 
Likewise, we find that the circumstances presented here do not merit relief 
pursuant to section 682.13(1)(c), Florida Statutes (2009), because the arbitrators 
did not exceed their powers.    
2.  Whether the Arbitration Panel Exceeded its Powers 
As noted above, JMC argues that the arbitrators exceeded their powers 
because the panel interpreted the purchase agreement in a manner that would 
violate state and federal laws, regulations, and rules resulting in both civil and 
criminal penalties.  Because the phrase “exceeded their powers” in section 
682.13(1)(c), Florida Statutes (2009), does not encompass misinterpretations of 
contractual provisions or other errors of law, but is jurisdictional in nature, we 
disagree.   
                                          
 
 
14.  We again note that neither party contested the legality of the contract 
during the arbitration proceedings; only after an adverse arbitration award did JMC 
raise the issue of the contract’s illegality by asserting that the arbitration panel’s 
construction of the contract rendered it unlawful.  Further, the arbitration panel 
considered and rejected JMC’s arguments.  Where, as here, a contract is not 
patently illegal and criminal in nature, more expansive judicial review of an 
arbitral decision would amount to simple disagreement with an arbitrator’s 
application of the law to the facts.   
 
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In Schnurmacher, this Court discussed the meaning of “exceeded their 
powers” as follows:  
Section 682.13(1)(c) declares that an arbitration award may be 
vacated if it is shown that the arbitrator exceeded his or her power. 
Respondent now urges us to interpret subsection (c) to include that if 
an arbitrator departs from the accepted rule of law, then the 
arbitrator’s award can be vacated on the ground that the arbitrator 
exceeded his or her power.  However, our view is that an arbitrator 
exceeds his or her power under subsection (c) when he or she goes 
beyond the authority granted by the parties or the operative documents 
and decides an issue not pertinent to the resolution of the issue 
submitted to arbitration.  See International Medical Centers, Inc. v. 
Sabates, 498 So. 2d 1292 (Fla. 3d DCA), review denied, 508 So. 2d 
14 (Fla. 1987); Broward County Paraprofessional Ass’n v. McComb, 
394 So. 2d 471 (Fla. 4th DCA 1981); Dubbin v. Equitable Life 
Assurance Society of the United States, 234 So. 2d 693 (Fla. 4th 
DCA), cert. denied, 238 So. 2d 423 (Fla. 1970). 
 
Schnurmacher, 542 So. 2d at 1329 (emphasis added); see also Nucci v. Storm 
Football Partners, 82 So. 3d 180, 183 (Fla. 2d DCA 2012) (noting that an arbitrator 
exceeds his power only when he exceeds the authority the parties granted him in 
their agreement to arbitrate and stating that an arbitrator may very well exceed his 
authority when he decides an issue that is not pertinent to resolving the issue 
submitted to arbitration).      
The 2009 version of the statute, applicable here, provides that a court shall 
vacate an award when “[t]he arbitrators or the umpire in the course of her or his 
 
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jurisdiction exceeded their powers.”15  § 682.13(1)(c) (2009).  Thus, a claim that an 
arbitrator exceeded his or her powers is jurisdictional in nature and is in reference 
to the scope of authority given to an arbitrator in the arbitration agreement.  
Moreover, reading this subsection of the statute together with the remainder of the 
statute, it is clear that the Legislature intended the grounds for vacating an award to 
be misconduct-oriented or process-oriented.  For instance, the statute provides 
circumstances under which an award could be vacated such as corruption, fraud, 
undue means, evident partiality, misconduct prejudicing the rights of any party, 
refusal to postpone the hearing upon sufficient cause being shown or refusal to 
hear evidence material to the controversy, or that there was no agreement or 
provision for arbitration.  Even the cases cited by JMC to support its proposition 
demonstrate the jurisdictional quality of this subsection.   
In Soler v. Secondary Holdings, Inc., 832 So. 2d 893 (Fla. 3d DCA 2002), 
the Third District considered the appellant’s claim that an arbitrator exceeded the 
scope of his jurisdiction, which was limited to a determination of whether a joint 
venture existed between the parties.  Id. at 894.  In holding that the arbitrator 
exceeded his authority because both the arbitration agreement and the trial court’s 
                                          
 
 
15.  This section was subsequently amended in 2013.  It was changed to 
section 682.13(1)(d) and provides that a court shall vacate an award when “an 
arbitrator exceeded the arbitrator’s powers.”  It is not clear why the “in the course 
of her or his jurisdiction” language was stricken from the statute.  Nevertheless, the 
absence of such language from the 2009 statute would not alter the result.    
 
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order limited the arbitration proceeding to a determination of whether a partnership 
was formed, the Third District noted that “[a]n Arbitrator exceeds his or her power 
when he or she goes beyond the authority granted by the parties and decides an 
issue not pertinent to the resolution of the matter submitted to arbitration.”  Id. at 
895.      
In Edstrom Industries, the Seventh Circuit Court of Appeals held that “the 
arbitrator cannot disregard the lawful directions the parties have given them.  If 
they tell him to apply Wisconsin law, he cannot apply New York law.”  Edstrom 
Indus., 516 F.3d at 552 (holding that manifest disregard of the law is not a ground 
on which a court may reject an arbitrator’s award under the FAA).  Thus, Edstrom 
stands for the proposition that an arbitrator exceeds his or her powers if the 
arbitration clause directs the arbitrator to apply a particular state’s laws and the 
arbitrator chooses to apply a different state’s laws, which would be acting outside 
the scope of authority provided by the parties to the contract.   
Here, the parties’ arbitration clause authorized the arbitration panel to 
preside over “[a]ny dispute, controversy or claim arising out of or related to this 
Agreement or the breach hereof”—the clause did not contain any other limiting 
language of authority.  The arbitration panel presided over a claim for breach of the 
agreement, awarding damages and attorney’s fees and costs.  Thus, by awarding 
damages based on a breach of contract, the arbitration panel “did what the parties 
 
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had asked” and did not “decide[] an issue not pertinent to the resolution of the 
issue submitted to arbitration.”16  See Schnurmacher, 542 So. 2d at 1329; Oxford 
Health, 133 S. Ct. at 2069.  Accordingly, the arbitration panel did not exceed its 
powers.     
III.  CONCLUSION 
 
Based on the foregoing, the claim that an arbitration panel construed a 
contract containing an arbitration provision to be an unlawful agreement is an 
insufficient basis to vacate an arbitrator’s decision pursuant to the FAA or the 
FAC.  Further, the arbitration panel did not exceed its powers.  Accordingly, we 
quash the Fourth District’s decision in Jupiter Medical Center, Inc. v. Visiting 
Nurse Ass’n of Florida, Inc., 72 So. 3d 184 (Fla. 4th DCA 2011), because the 
district court below erred in holding that a court must determine whether a contract 
is legal prior to enforcing an arbitral award based on the contract.   
 
It is so ordered.   
PARIENTE, LEWIS, QUINCE, and PERRY, JJ., concur. 
CANADY and POLSTON, JJ., concur in result. 
                                          
 
 
16.  If JMC’s argument did apply, such a construction of section 
682.13(1)(c), Florida Statutes (2009), would lead to parties such as VNA 
contesting an arbitrator’s determination that a contract is illegal and unenforceable 
on the very same grounds.  For instance, if the arbitrator were to have held that the 
contract was unenforceable despite language in the contract stating the parties were 
to construe the agreement in accordance with the law, VNA would argue that the 
arbitrator exceeded his or her powers because the contract constrained the 
arbitrator from reaching such a determination.      
 
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NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
Application for Review of the Decision of the District Court of Appeal – Direct 
Conflict of Decisions  
 
Fourth District – Case No. 4D10-1803  
 
(Palm Beach)  
 
David B. Earle, Thomas K. Gallagher, and John P. Carrigan of Ross Earle & 
Bonan, P.A., Stuart, Florida,  
 
for Petitioner 
  
Michael G. Austin and Matthew D. Grosack of DLA Piper LLP (US), Miami, 
Florida,  
 
for Respondent