Opinion
No. 3-01-CV-2246-M
February 19, 2002
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Defendant United HealthCare Insurance Company ("UHC") has filed a motion to dismiss or, alternatively, to compel arbitration. For the reasons stated herein, the motion should be denied without prejudice.
The Civil Justice Expense and Delay Reduction Plan adopted by this Court provides that "[e]ach judge will continue to give priority to the monitoring and resolution of pending motions." Plan at § XI(2), reprinted in Texas Rules of Court — Federal at 278 (West Pamph. Supp. 2001). To eliminate undue delay and unnecessary expense to the parties in this and other civil actions, and in view of a recent ruling on a virtually identical motion in another case between the same parties, the Court will decide UHC's motion to dismiss or, alternatively, to compel arbitration without a written response. Weiner v. United HealthCare of Texas, Inc., No. 3-01-CV-1875-R (N.D. Tex. Feb. 15, 2002) (Kaplan, M.J.).
I.
Plaintiff Richard H. Weiner is a podiatrist who provides medical services to patients insured under various health insurance plans pursuant to a fee-for-service arrangement with their insurance companies. Under this arrangement, the insurance company agrees to pay the healthcare provider directly for medical services rendered to covered patients in exchange for discounted fees for those services. Such an arrangement exists between plaintiff and UHC for patients insured under a self-funded benefit plan provided by Associates Corporation of North America, a subsidiary or affiliate of CitiCorp. (UHC Br. at 2, ¶¶ 3-4 Exh. A-3).On September 7, 2001, plaintiff sued CitiCorp in the Justice of the Peace Court, Precinct 3, of Dallas County, Texas. His one-page pro se petition alleges that "defendant is justly indebted to the plaintiff in the sum of $423.00 . . . based on the following facts: nonpayment of medical services on patient Jane M. Newman (Mary Jane Carver), ID #461171665, Group #199921, date of service 6-8-01." (UHC Not. of Rem., Exh. A-1). Six weeks later, plaintiff amended his petition to join UHC as a party. ( Id., Exh. A-3). Believing that plaintiff was seeking payment for medical services rendered to a participant of an employee welfare benefit plan, UHC timely removed the case to federal court on the basis of ERISA preemption. ( Id. at 2, ¶ 3). Plaintiff then filed a motion to remand the case to state court. The motion was denied because the only viable claim alleged by plaintiff in his state court petition was as "the assignee of an ERISA plan beneficiary." FINDINGS REC. OF MAG. JUDGE, 11/21/01 at 2, adopted by ORDER, 12/19/01.
UHC now moves to dismiss this case or, alternatively, to compel arbitration. Under the terms of the provider agreement between plaintiff and UHC, the parties agreed to resolve any disputes, disagreements, or controversies through binding arbitration instead of litigation. Included within the scope of this arbitration clause are plaintiff's claims for payment for medical services provided to Newman.
The HealthTexas Provider Network executed a provider agreement with MetraHealth Care Plan of Texas, Inc. and the MetraHealth Insurance Company effective January 1, 1996. Sometime thereafter, the MetraHealth entities were acquired by United HealthCare Corporation. MetraHealth Insurance Company changed its name to United HealthCare Insurance Company and MetraHealth Care Plan of Texas, Inc. changed its name to United HealthCare of Texas, Inc. The parties entered into another provider agreement effective June 11, 1998. That agreement contains the arbitration clause at issue in this case. ( See UHC Br., Beaty Aff. at 1-2, ¶¶ 3-7).
II.
The Physician Group Services Agreement between plaintiff and UHC provides, in relevant part:
7.1 The Parties will work together in good faith to resolve any disputes about their business relationship. As to any matter of disagreement, dispute or controversy between or among the Parties not resolved by informal means which relates to the subject matter of this agreement and arises after the Effective Date, any Party to such disagreement, dispute or controversy may as its exclusive remedy, demand that it be submitted to binding arbitration.
* * * *
7.5 Each of the Parties agrees that it will not file (nor will it cause any other Person to file) any suit, motion, petition or otherwise commence any legal action or proceeding which may by [sic] submitted to arbitration pursuant to this Agreement.
(UHC Br., Exh. A-3 at 30-32, ¶¶ 7.1 7.5). The provider agreement further specifies that it "shall be construed and enforced according to the laws of the State of Texas without regard to that State's principles of conflicts of laws." ( Id., Exh. A-3 at 28, ¶ 6.8). Consequently, the resolution of UHC's motion is governed by the Texas General Arbitration Act rather than the Federal Arbitration Act. See Volt Information Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior University, 489 U.S. 468, 477-79, 109 S.Ct. 1248, 1255-56, 103 L.Ed.2d 488 (1989); Al's Formal Wear of Houston, Inc. v. Sun, 869 S.W.2d 442, 443 n. 3 (Tex.App.-Houston [1st Dist.] 1993, writ denied). See also Tuco, Inc. v. Burlington Northern Railroad Co., 912 S.W.2d 311, 314-15 (Tex.App.-Amarillo 1995), as modified, 960 S.W.2d 629 (Tex. 1997) (Texas General Arbitration Act is consistent with and not preempted by Federal Arbitration Act).
The decision whether to compel arbitration involves a two-step inquiry. First, the Court must determine whether a valid, enforceable arbitration agreement exists. ASW Allstate Painting Construction Co. v. Lexington Insurance Co., 188 F.3d 307, 311 (5th Cir. 1999); Henry v. Gonzalez, 18 S.W.3d 684, 688 (Tex.App.-San Antonio 2000, pet. dism'd by agr.). The burden is on the party seeking to compel arbitration to establish the existence of such an agreement. Henry, 18 S.W.3d at 688-89. If the party meets that burden, a presumption in favor of arbitration arises. Id. at 689. The burden then shifts to the party opposing arbitration to show that the agreement is not enforceable or the dispute does not come within the scope of the agreement to arbitrate. Id.
A.
Clearly, an arbitration agreement exists with respect to any claim "which relates to the subject matter of [the provider] agreement." (UHC Br., Exh. A-3 at 30-31, ¶ 7.1). However, the only claim plaintiff has alleged in his state court petition is for payment for medical services rendered to patients as "the assignee of an ERISA plan beneficiary." See FINDINGS REC. OF MAG. JUDGE, 11/21/01 at 2, adopted by ORDER, 12/19/01. That pleading has not been amended or supplemented. Thus, in the present posture of this suit, the sole claim asserted by plaintiff relates to the ERISA plan, not to the provider agreement. Consequently, it is outside the scope of the arbitration clause. See Weiner v. United HealthCare of Texas, Inc., No. 3-01-CV-1875-R, op. at 4 (N.D. Tex. Feb. 15, 2002) (Kaplan, M.J.). UHC's motion to dismiss or, alternatively, to compel arbitration should be denied on that basis.
This distinction differentiates this case from yet another action involving the same parties. Weiner v. Southwest Airlines Co. Funded Welfare Benefit Plan, et al., No. 3-01-CV-2183-M. In that case, plaintiff sought and obtained leave to amend his state court petition to assert claims against UHC for quantum meruit, breach of contract, breach of the duty of good faith and fair dealing, and violations of the Texas Theft Liability Act. Such claims are not preempted by ERISA and clearly "relate to" the provider agreement. As a result, the magistrate judge has recommended that plaintiff's claims against UHC be dismissed without prejudice in favor of arbitration. Weiner v. Southwest Airlines Co. Funded Welfare Benefit Plan, et al., No. 3-01-CV-2183-M, op. at 8-9 (N.D. Tex. Feb. 15, 2002) (Kaplan, M.J.).
B.
The recommended disposition of this motion merely delays the inevitable. As the Court has ruled in another case, any claims asserted by plaintiff as the assignee of an ERISA plan beneficiary are preempted by ERISA and subject to dismissal. See Weiner v. Southwest Airlines Co. Funded Welfare Benefit Plan, et al., No. 3-01-CV-2183-M, op. at 4-5 (N.D. Tex. Feb. 15, 2002) (Kaplan, M.J.). Although UHC has not moved to dismiss this case on that ground, any such motion likely would be granted. In order to avoid ERISA preemption, plaintiff could amend his state court petition to allege claims for quantum meruit, breach of contract, breach of the duty of good faith and fair dealing, and violations of the Texas Theft Liability Act. However, such claims clearly "relate to" the provider agreement and are subject to arbitration. See id. at 7-8. Either way, this case appears doomed for dismissal.
By order dated February 15, 2002, plaintiff has been directed to advise the Court by March 1, 2002 whether he intends to seek leave to amend his complaint to allege state law claims that are not preempted by ERISA but would be subject to arbitration, or whether he intends to dismiss this case. See ORDER, 2/15/02. If plaintiff seeks and obtains leave to amend, UHC may reurge its motion to dismiss or, alternatively, to compel arbitration. If plaintiff takes no action by this deadline, UHC may file a motion to dismiss on grounds of ERISA preemption.
RECOMMENDATION
UHC's motion to dismiss or, alternatively, to compel arbitration should be denied without prejudice.