Court Opinion

ID: 3035048
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:52:01.095533+00
Date Added: 2024-06-11T11:40:51.649102
License: Public Domain

NOT FOR PUBLICATION

                     UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                               MAR 17 2010

                                                                            MOLLY C. DWYER, CLERK
                                                                             U.S. COURT OF APPEALS

OMNICARE, INC.,                                   No. 09-55142

              Plaintiff - Appellant,              D.C. No. 8:08-cv-01254-CJC-
                                                  MLG
  v.

RXSOLUTIONS, INC., DBA Perscription               MEMORANDUM *
Solutions,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                    Cormac J. Carney, District Judge, Presiding

                        Argued and Submitted March 5, 2010
                               Pasadena, California

Before: GOULD, IKUTA and N.R. SMITH, Circuit Judges.

       Omnicare, Inc., appeals the district court’s denial of its motion to vacate a

portion of the arbitration award issued during a contract dispute between Omnicare

and RxSolutions, Inc. We have jurisdiction under 28 U.S.C. § 1291, and we

affirm.

          *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      Omnicare contends that the district court should have vacated the arbitration

award under 9 U.S.C. § 10(a)(4) because the arbitrator exceeded his powers in

three ways.1 We address these in turn.

      First, Omnicare argues that the arbitrator exceeded his powers because the

form of the award did not comply with the requirements in the arbitration clause of

the parties’ contract. The arbitration clause required the arbitrator to “prepare in

writing and provide to the Parties an award including factual findings and the legal

reasons on which the award is based.” Our review of the award leads us to

conclude that its form complied with the terms of parties’ contract. The arbitrator

made factual findings and stated the legal reasons—most importantly that

RxSolutions did not breach the contract—for declining to award damages to

Omnicare on its co-pay claims. Contrary to Omnicare’s argument, nothing in the

parties’ contract required separate “findings of fact” or “conclusions of law”

sections, so this case does not implicate Western Employers Ins. Co. v. Jefferies &

Co., Inc., 958 F.2d 258 (9th Cir. 1992). The district court correctly declined to

      1
            The parties are familiar with the Medicare Part D program, the
Centers for Medicare & Medicaid Services regulatory framework, and the factual
and procedural history of this case. We do not engage in a detailed discussion of
those background facts here.

                                           2
vacate the award for noncompliance with the form requirements in the parties’

contract.

      Second, Omnicare argues that the district court should have vacated the

arbitration award as “completely irrational” because the award “fail[ed] to draw its

essence from [the parties’] agreement.” See Comedy Club, Inc. v. Improv West

Assocs., 553 F.3d 1277, 1288 (9th Cir. 2009) (citations omitted). This is a highly

deferential standard, and vacatur is appropriate only where “there is no basis in the

record for the arbitrator’s decision.” Id. at 1289. Our review of the arbitration

award, which resolved the parties’ contract dispute, reveals that the arbitrator

addressed the disputed contract provisions, and that his interpretation was not

wholly unreasonable, including his analysis of the “entitled to collect” and “shall

be at risk” language in Section 4.4 even if not citing to that section directly. The

arbitrator implicitly disagreed with Omnicare’s construction of these terms, instead

determining that RxSolutions did not breach its duties under the contract or the

CMS regulations incorporated by the contract. However, our scope of review on

such matters is narrow. “[T]he court must defer to the arbitrator’s decision as long

as the arbitrator even arguably construed or applied the contract.” U.S. Life Ins.

Co. v. Superior Nat’l Ins. Co., 591 F.3d 1167, 1177 (9th Cir. 2010) (internal

quotation marks and alterations omitted). Here, because the arbitrator considered

                                          3
and applied the parties’ contract, the resulting award cannot be considered

irrational under our precedent, and we cannot substitute Omnicare’s preferred

construction, or our own, for that of the arbitrator. See Kyocera Corp. v.

Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 1003 (9th Cir. 2003) (en banc).

The district court did not err in declining to vacate the arbitration award as

completely irrational.

      Finally, Omnicare argues that vacatur is appropriate because the arbitrator

manifestly disregarded the law. “[F]or an arbitrator’s award to be in manifest

disregard of the law, it must be clear from the record that the arbitrator recognized

the applicable law and then ignored it.” Comedy Club, 553 F.3d at 1290 (internal

quotation marks and alterations omitted). We reject Omnicare’s “manifest

disregard” claim because the arbitrator recognized that the CMS regulations were

controlling and then applied them to the contract dispute. The arbitrator discussed,

among others, the regulations governing the determination of Part D coverage for

individual beneficiaries, the prohibition on collecting co-pays from so-called

institutionalized dual eligibles, and the “best available evidence” rule for

demonstrating a beneficiary’s institutionalized dual eligible status. That the

arbitrator did not adopt Omnicare’s preferred conclusion after applying the CMS

rules to the contract dispute does not mean that the arbitrator disregarded either the

                                           4
CMS rules or the contract provisions. Omnicare has not shown that the arbitrator

“understood and correctly stated the law, but proceeded to disregard the same.”

The district court did not err in denying the motion to vacate the arbitration award.

See Collins v. D.R. Horton, Inc., 505 F.3d 874, 879 (9th Cir. 2007).

      AFFIRMED.

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