Court Opinion

ID: 3009438
Source: CourtListenerOpinion
Date Created: 2015-10-13 19:00:48.865393+00
Date Added: 2024-06-11T11:39:32.777870
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 14-2170

GREENVILLE HOSPITAL SYSTEM,

                Plaintiff - Appellant,

           v.

EMPLOYEE WELFARE BENEFIT PLAN FOR EMPLOYEES OF HAZELHURST
MANAGEMENT COMPANY, Underwritten by Aetna Life Insurance
Company,

                Defendant - Appellee.

Appeal from the United States District Court for the District of
South Carolina, at Greenville. Timothy M. Cain, District Judge.
(6:14-cv-01919-TMC)

Argued:   September 15, 2015                 Decided:   October 13, 2015

Before KING and HARRIS, Circuit Judges, and George Jarrod HAZEL,
United States District Judge for the District of Maryland,
sitting by designation.

Affirmed by unpublished opinion.        Judge Harris         wrote   the
opinion, in which Judge King and Judge Hazel joined.

ARGUED:    Linda C. Garrett, LADDAGA – GARRETT, P.A., North
Charleston, South Carolina, for Appellant.      Deborah Whittle
Durban, NELSON MULLINS RILEY & SCARBOROUGH, LLP, Columbia, South
Carolina, for Appellee. ON BRIEF: William C. Wood, Jr., NELSON
MULLINS RILEY & SCARBOROUGH, LLP, Columbia, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.

                                2
PAMELA HARRIS, Circuit Judge:

     Greenville Hospital System (“Greenville”) and Aetna Health

Management,   LLC   (“Aetna”)   entered    into     an   agreement    (the

“Agreement”) under which Greenville provides hospital services

to patients covered by Aetna insurance plans and then submits

claims directly to Aetna for payment.             This case arose when

Aetna denied payment of a claim on the ground that Greenville

had not complied with Aetna’s “precertification” requirements,

as mandated by the Agreement.

     The   Agreement   also     includes   an      arbitration     clause,

providing for binding arbitration of “[a]ny controversy or claim

arising out of or relating to” the Agreement.              The district

court held that Greenville’s dispute with Aetna over payment of

its claim relates to the parties’ Agreement, and is thus covered

by the arbitration clause.      We agree, and affirm the district

court’s dismissal of this case.

                                  I.

                                  A.

     Greenville, a provider of health-care services, and Aetna,

an insurer, entered into their Agreement in 2004.                Under the

Agreement, Greenville bills Aetna directly for the services it

provides to patients insured by Aetna-administered plans, and

Aetna pays those claims at rates established by the Agreement.

                                   3
In    most     circumstances,        Greenville        may   not   seek    reimbursement

directly from patients, even if Aetna denies payment on their

claims.        The Agreement requires Greenville to facilitate this

direct-billing             process   by   obtaining      assignments       of   patients’

rights        to     be    reimbursed     for       health   services       under     their

insurance plans.

       Two provisions of the Agreement are of particular relevance

here.     First, under paragraph 5.1 of the Agreement, Greenville

generally must obtain “precertification” from Aetna before the

provision of services, as detailed in patients’ insurance plans,

and    give        Aetna    notice   before     admissions      for   inpatient       care.

Specifically, paragraph 5.1 provides:

       Except when a [patient] requires Emergency Services,
       [Greenville] agrees to comply with any applicable
       precertification and/or referral requirements under
       the [patient’s] Plan prior to the provision of
       Hospital Services [and] . . . to notify [Aetna] within
       two (2) business days, or as soon as reasonably
       possible of all admissions of [patients], and of all
       services for which [Aetna] requires notice.

J.A. 19.

       Second, of course, is the Agreement’s arbitration clause.

The Agreement sets out in some detail how Greenville and Aetna

are      to        resolve      disputes,           beginning      with     Greenville’s

participation             in   Aetna’s    internal       grievance        procedure    and

continuing with mediation.                And in the event that mediation is

                                                4
unsuccessful, “either party may submit the dispute to binding

arbitration.”     J.A. 25.   As set out in the Agreement:

      Any controversy or claim arising out of or relating to
      this Agreement or the breach, termination, or validity
      thereof,   except   for   temporary,   preliminary,   or
      permanent injunctive relief or any other form of
      equitable   relief,   shall   be  settled   by   binding
      arbitration administered by the American Arbitration
      Association (“AAA”) and conducted by a sole Arbitrator
      (“Arbitrator”) in accordance with the AAA’s Commercial
      Arbitration Rules (“Rules”).

Id.   (emphasis    added).     Emphasizing   the   importance   of   the

arbitration provision, the top of every page of the Agreement

contains the following statement, in bold lettering:

      NOTICE:   THIS  AGREEMENT  IS  SUBJECT   TO  MANDATORY
      ARBITRATION PURSUANT TO THE FEDERAL ARBITRATION ACT
      OR, IF THE FEDERAL ARBITRATION ACT IS DETERMINED TO BE
      INAPPLICABLE, THE UNIFORM ARBITRATION ACT, § 15-48-10,
      ET[] SEQ., CODE OF LAWS OF SOUTH CAROLINA (1976), AS
      AMENDED.

J.A. 10–29.

                                   B.

      The dispute at issue here arose in August of 2011, when

Greenville treated a minor child. 1      The patient’s father worked

for Hazelhurst Management Company (“Hazelhurst”), so the patient

was a beneficiary of an employee insurance plan established by

      1Greenville alleges these facts in its complaint.    In
considering a motion to dismiss, we “accept as true all well-
pleaded allegations.”    Mylan Labs., Inc. v. Matkari, 7 F.3d
1130, 1134 (4th Cir. 1993).

                                    5
Hazelhurst     and   fully       insured       by   Aetna   (the     “Plan”). 2               As

contemplated    by    the    Agreement,         Greenville    obtained         from          the

patient’s mother an assignment of the patient’s Plan benefits,

so that Greenville could submit claims for those benefits to

Aetna.    Greenville began treating the patient on an outpatient

basis, but at some point admitted the patient to the hospital

for inpatient care.

     After discharging the patient, Greenville submitted a claim

for benefits to Aetna.            Aetna denied the claim for failure to

comply with precertification requirements, explaining that “pre-

certification/authorization           [was]         not   received       in    a    timely

fashion.”      It    is   that    denial       that   Greenville        alleges         to    be

unreasonable under the Plan.                Greenville also claims that it

requested from Aetna a copy of Plan documents related to the

dispute on March 15, 2012, and that Aetna did not provide those

documents until March 11, 2014.

                                           C.

     After   unsuccessfully         appealing         the   denial      of    its       claim

through   Aetna’s     internal      grievance         process,     in    May       of    2014

     2 The corporate entity that insures the Plan is Aetna Life
Insurance Company.   The Parties do not dispute that Aetna Life
Insurance Company is covered by the Agreement, which extends to
all affiliates of Aetna Health Management, LLC, and like the
parties, we use “Aetna” to refer to both.

                                           6
Greenville filed suit against the Plan in the District of South

Carolina.       It brought two derivative claims as the assignee of a

Plan beneficiary: one for failure to pay benefits and one for

failure to provide Plan documents in a timely manner.                              Aetna, as

the    Plan’s       underwriter,        moved       to    compel    arbitration      and    to

dismiss       the    suit,       arguing    that         the    Agreement’s      arbitration

clause governed the parties’ dispute.

       The    district          court   agreed.          Greenville      filed     its    claim

pursuant to the Agreement, it reasoned, and Aetna denied that

claim under the Agreement, based on Greenville’s obligation to

comply with Plan precertification requirements.                           That is enough,

it    held,     to       show    that   Greenville’s            claims   to     payment    are

“related” to the Agreement, particularly under the federal-law

presumption         in    favor    of   a   broad        construction      of    arbitration

agreements.          Greenville         Hosp.   Sys.       v.    Emp.    Welfare    Benefits

Plan, C/A No. 6:14-1919-TMC, 2014 WL 4976588, at *4 (D.S.C. Oct.

3,    2014).         Accordingly,        the    district         court    granted    Aetna’s

motion to compel arbitration and to dismiss.                             Id. at *5.        This

timely appeal followed.

                                                7
                                        II.

                                         A.

       We review the district court’s arbitrability determination

de novo.      Cara’s Notions, Inc. v. Hallmark Cards, Inc., 140 F.3d
566, 569 (4th Cir. 1998).

       As the district court recognized, our evaluation of the

Agreement’s arbitration clause is guided by the “federal policy

favoring arbitration” established by the Federal Arbitration Act

(“FAA”), 9 U.S.C. § 1 et seq. (2012).                   Adkins v. Labor Ready,

Inc., 303 F.3d 496, 500 (4th Cir. 2002) (quoting Volt Info.

Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489
U.S. 468,    475–76    (1989)).      We     must   construe    the   arbitration

clause broadly, resolving any “ambiguities as to [its] scope” in

favor of arbitration.           Id.    Put differently, where the parties

have   agreed    to     an   arbitration      clause,    a   court   should   order

arbitration “unless it may be said with positive assurance that

the arbitration clause is not susceptible of an interpretation

that   covers    the     asserted     dispute.”         United   Steelworkers    v.

Warrior & Gulf Navigation Co., 363 U.S. 574, 582–83 (1960).                      If

a court determines, after applying this presumption in favor of

arbitration, that all of the issues presented are arbitrable,

then it may dismiss the case, as the district court did here.

Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252
F.3d 707, 709–10 (4th Cir. 2001).

                                         8
                                          B.

       We begin with the language of the arbitration clause, which

extends    to    “[a]ny    controversy         or       claim   arising      out    of   or

relating to” the Agreement.              As we have recognized before, the

“arising out of or relating to” formulation is a broad one,

“capable    of    an   expansive        reach.”           Am.     Recovery    Corp.      v.

Computerized Thermal Imaging, Inc., 96 F.3d 88, 93 (4th Cir.

1996) (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U.S. 395,     398   (1967)).         Such        a    clause    “does     not     limit

arbitration to the literal interpretation or performance of the

contract.       It embraces every dispute between the parties having

a significant relationship to the contract regardless of the

label attached to the dispute.”               J.J. Ryan & Sons, Inc. v. Rhone

Poulenc    Textile,     S.A.,     863 F.2d 315,     321    (4th     Cir.    1988)

(interpreting arbitration clause covering all disputes “arising

in connection” with the agreement).                      Even before we apply the

presumption in favor of arbitration, in other words, we start

here with a particularly comprehensive agreement to arbitrate.

       On its face, that agreement to arbitrate plainly extends to

Greenville’s      claims    against       Aetna.           Whether     Greenville        is

entitled to payment from Aetna will turn on whether Greenville

complied with applicable precertification requirements, and, if

not, the appropriate penalty for that failure.                         The source of

Greenville’s       obligation       to     comply           with     precertification

                                          9
requirements is the Agreement, paragraph 5.1 of which requires

Greenville      to    follow       “any    applicable        precertification             and/or

referral requirements under the [patient’s] Plan.”                               It follows,

as the district court concluded, that the dispute here has a

“significant relationship” to the Agreement, J.J. Ryan & Sons,
863 F.2d at 321, which is all that is needed to bring it within

the scope of the arbitration clause.

      Greenville’s       primary        argument        is   that      because      its    claim

cannot be resolved by the terms of the Agreement alone, and will

instead require reference to the precertification rules of the

patient’s       insurance       Plan,      it    does     not    “aris[e]          out    of    or

relat[e] to” the Agreement.                 We disagree.              We have no quarrel

with the premise of Greenville’s argument:                            Under paragraph 5.1

of   the    Agreement,       the    particular        precertification             rules       that

apply      in   a    given   case     will       be   elaborated         by    a    patient’s

insurance plan.          But it does not follow that a dispute over

precertification does not “relate” to the Agreement as well,

given that it is the Agreement that obliges Greenville to adhere

to precertification protocols at all.

      In support of its argument, Greenville relies primarily on

out-of-circuit          cases       considering          whether         certain          claims

involving       health-care         agreements          arise        under    the    Employee

Retirement Income Security Act of 1974 (“ERISA”), rather than

state      contract      law,        for        purposes        of     federal       question

                                                10
jurisdiction and preemption.         In Lone Star OB/GYN Associates v.

Aetna Health Inc., for instance, the Fifth Circuit held that

disputes over a “right to payment” require determinations under

individual insurance plans covered by ERISA, whereas disputes

regarding   the   appropriate   “rate     of   payment”    call     only   for

interpretation of provider agreements that fall outside ERISA’s

scope and so may be heard in state court.              579 F.3d 525, 530

(5th Cir. 2009). 3    According to Greenville, its claim falls on

the “right to payment” side of the line, and thus arises under

the   patient’s   insurance   plan    rather   than   under   its   provider

agreement with Aetna.

      We may assume the validity of Greenville’s premise here —

that its precertification dispute with Aetna would be treated as

a “right to payment” dispute arising under ERISA by Lone Star

and similar cases.    But that does not mean that its dispute does

not also “relate to” the Agreement between Greenville and Aetna,

under the terms of the arbitration clause.                The question in

cases like Lone Star is whether a claim has any connection to an

      3Other circuits have used the same distinction between
“right to payment” and “rate of payment” claims to determine
whether ERISA applies.      See, e.g., Montefiore Med. Ctr. v.
Teamsters Local 272, 642 F.3d 321, 331 (2d Cir. 2011); Conn.
State Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337,
1350 (11th Cir. 2009); Pascack Valley Hosp. v. Local 464A UFCW
Welfare Reimbursement Plan, 388 F.3d 393, 403–04 (3d Cir. 2004);
Blue Cross v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d
1045, 1051 (9th Cir. 1999).

                                     11
ERISA-covered           insurance         plan,        for    purposes     of       establishing

federal jurisdiction, or whether it instead arises exclusively

under a provider agreement like the Agreement here.                                        See 579
F.3d at 530–31.             The arbitration clause, on the other hand, is

not    limited         to   claims        that    arise       exclusively       —    or    indeed,

“arise” at all — under the Agreement; instead, it extends to any

claim “arising out of or relating to” the Agreement.                                  Whether or

not Greenville’s precertification dispute with Aetna “arises out

of”    the        Agreement,         it     clearly          “relates     to”       Greenville’s

commitment          under       that        Agreement           to     abide        by     Aetna’s

precertification rules.

       We    are        similarly         unpersuaded           by    Greenville's          second

argument: that the arbitration clause does not apply because

Greenville is bringing derivative, rather than direct, claims

against      Aetna.         The      claims      in     this    case    originated         with    a

patient, before Greenville, consistent with its Agreement with

Aetna, obtained an assignment of those claims from the patient’s

mother.       Because          the   arbitration             clause    would    not       bind   the

patient      in    a    suit    against       Aetna,         Greenville    argues,         it    also

should not bind Greenville when it steps into the shoes of that

patient to sue on his claim.

       We disagree.            Nothing about the arbitration clause suggests

that   it    is        intended      to    exclude       from    its    scope       claims       that

otherwise “aris[e] out of or relat[e] to” the Agreement solely

                                                  12
because    they    rest     on    assignments.       On    the   contrary:      The

Agreement’s       direct-payment         system      expressly        contemplates

assignment,       obligating         Greenville       to     “obtain[]       signed

assignments       of   benefits       authorizing      payment     for     Hospital

Services    to    be   made       directly    to   [Greenville].”        J.A.   17.

Assignment is what the parties bargained for when they entered

into the Agreement, including its arbitration clause, and the

derivative nature of a claim does not preclude it from “relating

to” the Agreement. 4             At a minimum, the arbitration clause is

“susceptible      of   an        interpretation     that    covers”      derivative

claims, United Steelworkers, 363 U.S. at 582–83, and under the

presumption in favor of arbitration, that is enough for us to

conclude that it governs this dispute.

     4 Our analysis is consistent with CardioNet, Inc. v. Cigna
Health Corp., 751 F.3d 165 (3d Cir. 2014), on which Greenville
principally relies.     There, the Third Circuit considered a
provider-agreement arbitration clause limited to disputes over
“the performance or interpretation of the Agreement.”    Id. at
173.   The court held that this clause did not reach derivative
claims but expressly acknowledged that a different arbitration
clause might, if the clause “intimat[ed] that the parties
intended to arbitrate such claims.”        Id. at 179.      The
arbitration clause in front of us is significantly broader than
the one at issue in CardioNet, and the Agreement to which it
refers specifically provides for the assignment of claims.
Under those circumstances, and given both parties’ level of
sophistication, cf. Carnival Cruise Lines, Inc. v. Shute, 499
U.S. 585, 597–98 (1991) (Stevens, J., dissenting), we conclude
that Greenville had ample notice that its assigned claims would
be subject to arbitration to the extent they arose under or
related to the Agreement.

                                         13
                              III.

     For the reasons set forth above we affirm the decision of

the district court in all respects.

                                                      AFFIRMED

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