Robert L. Meinders, D.C., LTD v. Unitedhealthcare, Inc. et al
Filing
93
ORDER granting 83 Sealed Motion. Pursuant to Rule 12(b)(3), the Court DISMISSES this case for improper venue as to UnitedHealthcare of Illinois, Inc., and United HealthCare Services, Inc., and STAYS the case as to the remaining defendants pending arbitration. SEE ORDER FOR DETAILS. Signed by Judge David R. Herndon on 7/15/16. (klh)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
DR. ROBERT L. MEINDERS. D.C. LTD.,
Individually and as the representative of
a class of similarly-situated persons,
Plaintiff,
v.
No. 14-0548-DRH
UNITEDHEALTHCARE, INC., et al.,
Defendants.
MEMORANDUM and ORDER
HERNDON, District Judge:
I.
Introduction and Background
This matter is on remand from the Seventh Circuit Court of Appeals. On
September 24, 2015, the Seventh Circuit issued its Mandate reversing and
remanding this case for further proceedings (Doc. 43-1). The Seventh Circuit found
that the Court “premised its dismissal order on law and facts to which Meinders
did not have a full and fair opportunity to respond.…” (Doc. 43). Specifically, the
Seventh Circuit held:
Page 1 of 10
As for the merits, both parties acknowledge that the contractual theory
of assumption is one through which a nonsignatory to an arbitration
agreement can enforce the agreement. The parties disagree, however,
as to whether such assumption occurred here. All we have in the
record on this point is Van Ham’s vague declaration stating, “United
has assumed important obligations under the Provider Agreement,
such as [ACN Group’s] obligation to coordinate and transmit
payments to providers such as plaintiff in this lawsuit.” Meinders
raises a host of questions on appeal regarding Van Ham’s declaration,
many of which seek to determine whether United has assumed ACN
Group’s obligations under the Provider Agreement, and if so, to what
extent. He seeks to submit testimony in response to Van Ham’s
bare-bones declaration, we think the more prudent course is to allow
Meinders to contest Van Ham’s declaration and delineate the metes
and bounds of United’s assumption. Accordingly, we remand to the
district court where these factual issues may be more appropriately
addressed in the first instance. On remand, the district court should
permit discovery to the extent necessary to allow Meinders to submit a
full response to Van Ham’s declaration and United’s assumption
theory. Beyond that, we trust the district court to handle the
proceedings as it sees fit.
(Doc. 43-2, p. 10).
After discovery closed on the issue, Meinders, a chiropractor, filed an
amended putative class action complaint against Unitedhealthcare, Inc., United
Healthcare of Illinois, Inc., United Healthcare Services, Inc., United Healthcare of
Arizona, Inc., UHC of California d/b/a United Heathcare of California, United
Healthcare of Colorado, Inc., United Healthcare of Oregon, Inc., United Healthcare
of Utah, Inc., and United Healthcare of Washington, Inc. on April 25, 2016 (Doc.
62). 1 Almost identical to the original complaint, the amended complaint alleges
that defendants sent a “junk fax” to Dr. Robert L. Meinders, D.C, in violation of the
1 Plaintiff amended its complaint after discovery closed and added seven United entities that are
incorporated outside of Illinois.
Page 2 of 10
Telephone Consumer protection Act. Plaintiff contends United sent an unsolicited
fax to him advertising United Healthcare’s services. The fax sent, at some time in
2013, to Meinders provided information about new technology designed to assist
United providers in recouping payment from patients.
Meinders’ three count
complaint alleges violations under the Telephone Consumer Protection Act, 47
U.S.C. § 227 (“TCP”) (Count I), common law conversion (Count II), and a violation
of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS §
505/2 (Count III). January 20, 2006, Meinders signed a Provider Agreement, with
ACN Group in which he agreed, inter alia, to arbitrate in Minnesota any and all
claims arising out of or relating to the Provider Agreement. 2
Specifically, the
Provider Agreement states in part:
21. DISPUTE RESOLUTION BETWEEN PROVIDER AND ACN GROUP
In the event of a dispute arising out of or relating to this Agreement …
[i]f Provider and ACN Group are unable to resolve [such] dispute by
mutual agreement, then matters in controversy may be submitted,
upon the motion of either party, to arbitration under the Commercial
Rules of the American Arbitration Association (AAA). All such
arbitration proceedings shall be administered by the AAA in Minnesota
… Any arbitration proceeding shall occur in the County of Hennepin,
State of Minnesota.
The parties have conducted discovery and filed cross briefs (Docs. 83, 88, 91
and 92). 3 As the issue is ripe, the Court turns to address the issue of whether
2 In 2003, ACN became a wholly owned subsidiary of United Healthcare Services, Inc. In August
2010, ACN changed its name to OptumHealth Care Solutions, Inc. (“Optum”). The Provider
Agreement with ACN was amended, effective September 21, 2010, to reflect the change from CAN to
Optum. Optum is a wholly owned subsidiary of United Healthcare Services, Inc.
3 Defendants filed a renewed motion to dismiss, to compel arbitration, and to stay (Doc. 83);
plaintiff filed his brief regarding defendants’ right to compel arbitration (Doc. 88) and both sides
Page 3 of 10
United, although not a signatory to the Provider Agreement, is entitled to enforce
the agreement’s arbitration clause on the ground that it assumed important
obligations under the Provider Agreement. 4
II.
Analysis
Because the arbitration clause in this case calls for arbitration outside the
Southern District of Illinois, Rule 12(b)(3) is the appropriate vehicle seeking
dismissal of Meinders’ suit. Faulkenberg v. CB Tax Franchise Systems, LP, 637
F.3d 801, 808 (7th Cir. 2011) (“[W]e have held that a Rule 12(b)(3) motion to
dismiss for improper venue, rather than a motion to stay or compel arbitration, is
the proper procedure to use when the arbitration clause requires arbitration
outside the confines of the district court’s district.”). When ruling on a motion to
dismiss of improper venue under Rule 12(b)(3), the Court may look to evidence
outside the pleadings. Id. at 809-10.
The FAA embodies a federal policy favoring enforcement of arbitration
agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The relevant language of the FAA
provides that an arbitration clause in a contract “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of
any contract.” 9 U.S.C. § 2. Courts are to uphold and enforce applicable arbitration
agreements according to their terms unless they are invalidated by “generally
filed responses to the respective pleadings (Docs. 91 & 92).
4 The parties agree that Illinois law governs whether the parties have entered into a contract.
Page 4 of 10
applicable contract defenses, such as fraud, duress, or unconscionability.” AT & T
Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1746, 179 L.Ed.2d 742
(2011) (quoting 9 U.S.C. § 2) (internal quotation marks omitted). A court must
determine whether the parties are bound by a given arbitration agreement and
whether
the
agreement
to
arbitrate
applies
to
a
particular
type
of
controversy. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123
S.Ct. 588, 154 L.Ed.2d 491 (2002). In determining whether parties have agreed to
arbitrate, courts apply state contract law. James v. McDonald's Corp., 417 F.3d
672, 677 (7th Cir. 2005). If a valid agreement to arbitrate exists, the burden is on
the party opposing arbitration to show that the claims at issue are not covered the
agreement. See Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 226–27
(1987). Any doubts concerning the scope of arbitrable issues must be resolved in
favor of arbitration, Moses H. Cone, 460 U.S. at 24–25, 103 S.Ct. 927; Gore v.
Alltel Commc'ns, LLC, 666 F.3d 1027, 1032 (7th Cir. 2012), and a request for
arbitration “should not be denied 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 of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574,
582–83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960).
The general rule is that an arbitration agreement binds only the parties to
that agreement.
See EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002).
“There are five doctrines through which a non-signatory can be bound by
arbitration agreements entered into by others: (1) assumption; (2) agency; (3)
Page 5 of 10
estoppel; (4) veil piercing; and (5) incorporation by reference.” Zurich American
Ins. Co. v. Watts Industries, Inc., 417 F.3d 682, 687 (7th Cir. 2005) (citing
Fyrnetics (H.K.) Ltd. v. Quantum Group, Inc., 293 F.3d 1023, 1029 (7th Cir.
2002); accord Am. Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d
349, 352 (2d Cir. 1999)).
Defendants argue that a non-signatory may enforce an arbitration clause of it
assumes the obligations of a signatory. Specifically, defendants argue that it is
clear from the record that United assumed payment and other obligations that the
Provider Agreement allocated to ACN, and that plaintiff assented to (and benefited
from) United’s assumption. 5 Plaintiff counters that defendants cannot enforce the
arbitration clause on its claims as defendants are neither parties nor signatories to
the agreement. Plaintiff argues that defendants did not assume obligations such
that they are entitled to invoke the arbitration clause contained in the agreement.
Further, plaintiff argues that he did not assume the obligation to arbitrate this
dispute with any of the defendants.
Plaintiff contends that defendants cannot
prove any “subsequent conduct” by anyone that showed that plaintiff or defendants
“assume[d] the obligation to arbitrate” with each other because plaintiff had agreed
to arbitrate disputes with ACN Group in the Provider Agreement. Plaintiff further
contends that the Agreement expressly defines “Payors” separately from “Parties,”
and recognizes that “Payors” are not parties to the Agreement even though they will
5 In the motion, UnitedHealthcare of Illinois, Inc., and United HealthCare Services, Inc., move to
dismiss and to compel arbitration while the remaining defendants request a stay of the litigation
pending arbitration.
Page 6 of 10
be performing obligations of ACN. The Court agrees with defendants.
Based on the fully re-briefed pleadings, including the discovery conducted on
this issue, it is clear to the Court that United has assumed the material obligations
of ACN Group, a wholly owned subsidiary of United, under the Provider Agreement,
which authorizes United to enforce the arbitration clause. Under Section 2 of the
Provider Agreement, ACN Group is obligated to coordinate payment to Meinders.
Colleen Van Ham, President and CEO of United attested that United assumed
important obligations under the Provider Agreement such as Optum’s obligation to
coordinate and transmit payments to providers such as Meinders. Furthermore,
United’s corporate representative, Thomas Doyle Wicklund, testified:
“But the ACN, through its provider agreement with Dr. Meinders, is
responsible for certain services. And those services from the very
first day of that provider agreement were – if assumed or taken on by
UnitedHealthcare. And those are paying claims and verifying eligibility
– adjudicating claims, don’t necessarily pay them all the time.
Adjudicating claims, submitting checks, submitting EOBs to both the
members and to the providers, administering services that from the
very first day UnitedHealthcare has provided.”
(Doc. 92-1, ps. 4-5; Wicklund Depo.). Wicklund further expounded:
“Anything associated with the adjudication of and payment of a claim
or the denial of a claim, anything associated with the verification of the
member’s eligibility, anything associated with providing the member
their benefit information that affects the provider’s policies – the
provider payment policies/procedures, coding changes. Anything that
would affect the authorization process and policies.”
(Doc. 92-1, p. 6).
Here, United performed the core duties of the Provider Agreement as it
performed the contractual duties of ACN, thus, the arbitration clause applies with
Page 7 of 10
full effect. United engaged in extensive subsequent conduct by carrying out ACN’s
obligations under the Provider Agreement by processing plaintiff’s claims, paying
plaintiff directly on those claims, conducting pre-authorization and other
administrative duties. The record is also clear that plaintiff was aware that United
was performing these tasks and assented to United’s performance by repeatedly
submitting claims to, and accepting payments from United. 6
Moreover, as a
non-party, United had no duties under the Provider Agreement until it assumed the
contractual duties of ACN.
The Provider Agreement states that ACN was
responsible for matters such as “claim processing” and “coordinating and
transmitting billing and payments,” among other administrative responsibilities,
including pre-authorization of services.
The record shows that United did all
those tasks and assumed ACN’s obligations. Thus, United HealthCare Services,
Inc., and UnitedHealthcare of Illinois, Inc., are entitled to enforce the arbitration
clause of the Provider Agreement. The Court grants the motion to dismiss for
improper venue as to these two defendants.
As to the request for the stay pending arbitration by the remaining
defendants,
the
Court
grants
the
motion.
The
court
has
discretion
to stay proceedings in the interests of judicial economy and controlling its
docket. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 21 n.
6 Defendants’ internal records reveal that Meinders submitted thousands of claims to United
between 2012 and 2014; that United processed these claims and that United provided Meinders
with explanation of benefits for each claim processed (Doc. 83-11). Defendants’ internal records
also show that United (not ACN) coordinated and transmitted payments to Meinders beginning in
2006. Id. In fact, Meinders produced bank records showing payments from United entities for
service rendered to United members (Doc. 83-3).
Page 8 of 10
23, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (“In some cases, of course, it may be
advisable
to stay litigation
among
the
non-arbitrating parties pending the
outcome of the arbitration. That decision is one left to the district court ... as a
matter of its discretion to control its docket.”); IDS Life Ins. Co. v. SunAmerica,
Inc., 103 F.3d 524, 529 (7th Cir. 1996) (acknowledging that district courts have
discretion
to stay proceedings
parties pending arbitration even
the arbitration agreement).
with
where
While
not
respect
all
parties
the arbitrator's findings
to
all
subject
to
pertaining
to
are
plaintiff’s claims against UnitedHealthcare of Illiniois, Inc., and United HealthCare
Services, Inc., are not binding on plaintiff’s claims against the remaining
defendants, considerations of judicial economy and avoidance of confusion and
possible inconsistent results nonetheless militate against plaintiff prosecuting his
claims
against
these
defendants
while arbitrating his
claims
against
UnitedHeatlhcare of Illinois, Inc., and United HealthCare Services, Inc.,
simultaneously. Here, the legal claims against defendants are identical. Should
this Court outpace the arbitration proceeding, this Court's rulings and findings
could affect the arbitrator's decision on those same issues, including the issue of
class certification.
III.
Conclusion
Accordingly, the Court GRANTS defendants’ renewed motion to dismiss, to
compel arbitration and to stay (Doc. 83). Pursuant to Rule 12(b)(3), the Court
Page 9 of 10
DISMISSES this case for improper venue as to UnitedHealthcare of Illinois, Inc.,
and United HealthCare Services, Inc., and STAYS the case as to the remaining
defendants pending arbitration.
IT IS SO ORDERED.
Signed this 15th day of July, 2016.
Digitally signed by
Judge David R. Herndon
Date: 2016.07.15
10:46:33 -05'00'
United States District Court
Page 10 of 10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?