Greenville Hospital System v. Employee Welfare Benefit Plan

Filing

UNPUBLISHED AUTHORED OPINION filed. Originating case number: 6:14-cv-01919-TMC Copies to all parties and the district court/agency. [999676458]. [14-2170]

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 1 of 14

UNPUBLISHED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Affirmed by unpublished opinion.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
opinion, in which Judge King and Judge Hazel joined.

wrote

the

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.

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 2 of 14

Unpublished opinions are not binding precedent in this circuit.

2

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 3 of 14

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

Appeal: 14-2170

In

Doc: 27

most

Filed: 10/13/2015

circumstances,

Pg: 4 of 14

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
rights

to

process

be

by

reimbursed

obtaining
for

assignments

health

services

of

patients’

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

participation

in

disputes,
Aetna’s

continuing with mediation.

beginning

internal

with

grievance

Greenville’s
procedure

and

And in the event that mediation is

4

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 5 of 14

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

1

Greenville alleges these facts in its complaint.
In
considering a motion to dismiss, we “accept as true all wellpleaded allegations.”
Mylan Labs., Inc. v. Matkari, 7 F.3d
1130, 1134 (4th Cir. 1993).
5

Appeal: 14-2170

Doc: 27

Hazelhurst

Filed: 10/13/2015

and

contemplated

by

Pg: 6 of 14

fully

insured

by

the

Agreement,

Aetna

“Plan”). 2

(the

Greenville

obtained

As

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 “precertification/authorization
fashion.”

It

is

that

[was]

denial

unreasonable under the Plan.

not

that

received

Greenville

in

a

timely

alleges

to

be

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
through

unsuccessfully

Aetna’s

internal

appealing

the

grievance

process,

2

denial
in

of

its

May

of

claim
2014

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

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 7 of 14

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.
the

Plan’s

dismiss

underwriter,

the

suit,

moved

arguing

to

that

compel
the

Aetna, as

arbitration

Agreement’s

and

to

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.
it

held,

to

show

that

Greenville’s

That is enough,

claims

to

payment

are

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

in

favor

of

Greenville

a

broad

Hosp.

construction

Sys.

v.

Emp.

of

arbitration

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

motion to compel arbitration and to dismiss.
timely appeal followed.

7

granted

Aetna’s

Id. at *5.

This

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 8 of 14

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.
have

agreed

to

an

Id.

Put differently, where the parties

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

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 9 of 14

B.
We begin with the language of the arbitration clause, which
extends

to

“[a]ny

controversy

relating to” the Agreement.

or

claim

arising

out

of

or

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.”
Poulenc

Textile,

S.A.,

863

J.J. Ryan & Sons, Inc. v. Rhone

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.
Greenville’s

obligation

to

comply
9

with

The source of
precertification

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 10 of 14

requirements is the Agreement, paragraph 5.1 of which requires
Greenville

to

follow

“any

applicable

precertification

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

and/or

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

relat[e] to” the Agreement.

does

not

“aris[e]

out

of

or

We disagree.

We have no quarrel

with the premise of Greenville’s argument:

Under paragraph 5.1

of

the

apply

Agreement,
in

a

the

given

insurance plan.

particular

case

will

precertification

be

elaborated

by

rules
a

that

patient’s

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
involving

cases

health-care

considering
agreements

whether
arise

certain

under

the

claims
Employee

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

contract

law,

for

purposes
10

of

federal

question

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

jurisdiction and preemption.

Pg: 11 of 14

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.
(5th Cir. 2009). 3

579 F.3d 525, 530

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

3

Other 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

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

ERISA-covered

insurance

plan,

Pg: 12 of 14

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

claims

limited

to

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,

commitment

under

it

clearly

that

“relates

Agreement

to

unpersuaded

by

to”

abide

Greenville’s
by

Aetna’s

precertification rules.
We

are

similarly

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.
patient

Because
in

a

suit

the

arbitration

against

Aetna,

clause

would

Greenville

not

argues,

bind

the

it

also

should not bind Greenville when it steps into the shoes of that
patient to sue on his claim.
We disagree.
that

it

is

Nothing about the arbitration clause suggests

intended

to

exclude

from

its

scope

claims

that

otherwise “aris[e] out of or relat[e] to” the Agreement solely
12

Appeal: 14-2170

Doc: 27

because

they

Filed: 10/13/2015

rest

on

assignments.

Agreement’s

direct-payment

assignment,

obligating

assignments
Services

to

of
be

benefits
made

Pg: 13 of 14

On

system

to

authorizing
to

contrary:

expressly

Greenville

directly

the

contemplates

“obtain[]

payment

The

for

[Greenville].”

signed
Hospital
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

interpretation

of

an

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

Appeal: 14-2170

Doc: 27

Filed: 10/13/2015

Pg: 14 of 14

III.
For the reasons set forth above we affirm the decision of
the district court in all respects.

AFFIRMED

14