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U.S. Supreme Court Upholds Arbitrator's Decision Allowing Class Arbitration in Action Against Health Insurers; WhatleyKallas Filed Amicus Curiae Brief in Case on Behalf of the AMA and the Medical Society of New Jersey

On Monday, June 10, 2013, the Supreme Court issued a unanimous opinion in favor of Respondent, John Ivan Sutter, M.D., in Oxford Health Plans, Inc. v. Sutter, No. 12-135. Click here to read the decision. WhatleyKallas had filed a Brief Amicus Curiae on behalf of the American Medical Association (AMA) and the Medical Society of New Jersey (MSNJ) in support of the Respondent.

In a rare 9-0 decision, the Supreme Court held that the arbitrator’s decision interpreting the parties’ arbitration clause to permit class arbitration withstood the limited judicial review of arbitrators’ decisions allowed under the Federal Arbitration Act. Significantly, the Court made clear that its 2010 opinion in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010) did not alter the highly deferential standard that is to be applied by courts in their review of arbitral awards, as the Petitioner, Oxford Health Plans LLC had argued. This clarification of the Stolt-Nielsen decision is a crucial development, as defendants across the country had argued for an expansive reading of Stolt-Nielsen that would permit a far more searching inquiry into arbitrator’s decisions allowing class arbitration than had previously been permitted.

The Sutter case arose out of a class arbitration by New Jersey physicians against Oxford before the American Arbitration Association. WhatleyKallas recently settled a separate but similar class arbitration against Oxford on behalf of New York physicians, Robert Scher, M.D. v. Oxford Health Plans, Inc. and Oxford Health Plans of New York, Inc., AAA Case No. 11 193 00548 05. Click here to read the press release.

In Sutter, the arbitrator hearing the dispute between the physician claimant and Oxford determined in 2003 that the arbitration clause in the parties’ contract permitted arbitration on a class-wide basis. Over the last ten years, Oxford had repeatedly and unsuccessfully challenged that determination, both before the arbitrator and in court. When the Third Circuit rejected Oxford’s latest challenge to the ruling, Oxford went to the Supreme Court on a Petition for Writ of Certiorari, which was granted on December 7, 2012.

The amicus brief drew upon the AMA’s and MSNJ’s specialized knowledge of the typical provider contracts offered by insurers like Oxford, of the types of disputes that commonly arise between physicians and insurers, and of the many barriers individual arbitration presents to the effective resolution of those disputes, to argue that limiting doctors solely to individual arbitration would leave doctors with no effective means of enforcing their contractual and statutory rights, rendering the arbitration clause unreasonable and to no effect. The amici further argued that consideration of this factor is not a “policy” argument, but rather is a matter of contract interpretation pursuant to state-law principles, and thus could not be disturbed by a court under the deferential standard dictated by the Federal Arbitration Act.

The Supreme Court found that the arbitrator’s various analyses were “through and through, interpretations of the parties’ agreement,” and thus could not be overturned by a court. (Slip op. at 5.)

WhatleyKallas lawyers Joe R. Whatley, Jr., Edith M. Kallas, Ilze C. Thielmann and Michael Lyons worked on the brief, with the assistance of Robert Axelrod and Jennifer Sobers of the law firm Pomerantz Grossman Hufford Dahlstrom & Gross LLP.

For a copy of the brief, click here.