SCOTUS Rules: Right or wrong, arbitrator's interpretation stands

The United States Supreme Court in Oxford Health Plans LLC v. Sutter held that an arbitration agreement in a fee-for-services contract between physicians and a health insurance company required arbitration of a class dispute arising under the contract.

Sutter, a physician, entered into a contract with Oxford, a health insurer, to provide medical services to members of Oxford’s network. Oxford agreed to pay for Sutter’s services at an agreed upon rate. Sutter later filed suit against Oxford on behalf of himself and a proposed class of other physicians who also contracted with Oxford. Sutter’s complaint alleged that Oxford failed to reimburse the putative class as required by the contract and applicable state law.

Oxford moved to compel arbitration, relying upon a provision in the contract requiring arbitration of “any dispute arising under this Agreement.” The motion was granted, and the arbitrator determined that the contract authorized class arbitration. In doing so, the arbitrator relied upon the language of the contract’s arbitration provision.

Oxford moved to vacate the arbitrator’s decision on the grounds that he exceeded his powers under the Federal Arbitration Act (“FAA”) Section 10(a)(4) by, in effect, misinterpreting and/or improperly applying the arbitration provision. 

The Supreme Court held that the arbitrator’s decision could not be vacated because it was arguably based upon the arbitrator’s interpretation of the parties’ contract, and, right or wrong, the parties had contracted to arbitrate their disputes. 

In so holding, the Court observed that in construing whether an arbitrator exceeded his powers under the FAA, “the question for a judge is not whether the arbitrator construed the parties’ contract correctly, but whether he construed it at all.” 

Originally posted to Barger & Wolen's Insurance Litigation & Regulatory Law blog.

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