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In the United States District Court for the Northern District of Texas Dallas Division

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In the United States District Court for the Northern District of Texas Dallas Division Case 3:10-cv-02652-L Document 26 Filed 06/27/11 Page 1 of 23 PageID 569 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION NEIL L. FISHER d/b/a Paragon Anesthesia § Associates, PARAGON AMBULATORY § HEALTH RESOURCES LLC, and § PARAGON OFFICE SERVICES, LLC, § § Plaintiffs, § § v. § Civil Action No. 3:10-CV-2652-L-BK § BLUE CROSS BLUE SHIELD OF § TEXAS, INC., § § Defendant. § FINDINGS, CONCLUSIONS, AND RECOMMENDATION Pursuant to the District Court’s Order of Reference (Doc. 20), Defendant’s motions to dismiss (Docs. 5-7, 15) and Motion to Dismiss and Motion Compel Arbitration as to all Parties, Alternatively, Motion to Sever and Compel Arbitration as to Paragon Anesthesia Associates and, Motion to Stay Case (Doc. 14), have been referred to the undersigned for findings, conclusions, and recommendation. After reviewing the motions, relevant pleadings and applicable law, the Court recommends that Defendant’s motions to dismiss (Docs. 5-7, 15) be DENIED, and that its Motion to Dismiss and Motion Compel Arbitration as to all Parties, Alternatively, Motion to Sever and Compel Arbitration as to Paragon Anesthesia Associates and, Motion to Stay Case (Doc. 14), be GRANTED in part. I. BACKGROUND This case was brought in state court on November 17, 2010, and subsequently removed to federal court by Defendant, Blue Cross Blue Shield of Texas (BCBSTX) on December 30, 2010. (Doc. 1 at 1). Thereafter, on January 24, 2011, BCBSTX filed motions to dismiss Plaintiffs’ Case 3:10-cv-02652-L Document 26 Filed 06/27/11 Page 2 of 23 PageID 570 Original Petition under Federal Rules of Civil Procedure 12(b)(1), (b)(6), and (b)(7). (Docs. 5- 7). On February 14, 2011, Plaintiffs filed their First Amended Complaint (Doc. 8), and in response, BCBSTX filed a Motion to Dismiss and Motion Compel Arbitration as to all Parties, Alternatively, Motion to Sever and Compel Arbitration as to Paragon Anesthesia Associates and, Motion to Stay Case (Doc. 14), and a Motion to Dismiss Plaintiffs’ First Amended Complaint (Doc. 15). In the latter, BCBSTX requests that its previous motions to dismiss (Docs. 5-7) apply to Plaintiffs’ First Amended Complaint. BCBSTX further indicates that it is only urging its original motions to dismiss subject to the Court’s denial of its Motion to Dismiss and Motion Compel Arbitration as to all Parties, Alternatively, Motion to Sever and Compel Arbitration as to Paragon Anesthesia Associates and, Motion to Stay Case. (Doc. 16 at FN 2, Doc. 17 at FN 2, 18 at FN 2). Relevant Facts1 Plaintiffs are three separate companies, allegedly owned by the same person, that provide anesthesia services to obstetricians/gynecologists during in-office surgeries. (Doc. 8 at 2; Doc. 14 at 15). Plaintiffs filed suit against BCBSTX alleging that BCBSTX failed to pay Plaintiffs for services performed for BCBSTX’s insureds and that BCBSTX also improperly sought to recoup past compensation paid to Plaintiffs.2 (Doc 8. at 5-15). Plaintiff, Neil L. Fisher, M.D., P.A., d/b/a Paragon Anesthesia Associates, P.A. (“PAA”), 1 For the purposes of these motions to dismiss, the Court takes all allegations pled in Plaintiffs’ First Amended Complaint as true and correct. See Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995). 2 Plaintiffs are specifically alleging breach of an express contract, breach of implied contracts, fraud, theft of services, quantum meruit, unjust enrichment, tortious interference, defamation and business disparagement, and equitable and quasi-estoppel. Page 2 of 23 Case 3:10-cv-02652-L Document 26 Filed 06/27/11 Page 3 of 23 PageID 571 entered into a Group Managed Care Agreement (“the Agreement”) with BCBSTX, which establishes what BCBSTX is to pay PAA for services that are provided “in-network.” (Doc. 8-1, passim). The agreement also contains a dispute resolution provision. (Doc. 8 at 4-5; Doc. 8-1 at 15-18). The two remaining Plaintiffs, Paragon Office Services (“POS”) and Paragon Ambulatory Health Resources (“PAHR”), aver that they have implied contracts with BCBSTX based on their course of dealing. (Doc. 8 at 4, 6-8). PAA provided anesthesia services to BCBSTX’s insureds and billed BCBSTX on an “in-network” basis, while PAHR provided anesthesia services to BCBSTX’s insureds and billed BCBSTX on an “out-of-network” basis. (Doc 8 at 5-7). POS provided the equipment for the anesthesia service and billed according to the patients “in- network” or “out-of-network” status. (Doc. 8 at 7). Plaintiffs further contend that they were previously paid for their services by BCBSTX, but that BCBSTX is now denying current payments and seeking to recoup past payments. (Doc. 8 at 8). In addition, Plaintiffs aver BCBSTX made false representations to physicians and patients. (Doc. 8 at 9, 11-14). Issues Presented In its motions to dismiss, Defendant argues that the dispute resolution provision in the Agreement is mandatory as to all parties and, alternatively, that the Agreement is mandatary to PAA and that the remaining claims brought by PAHR and POS should be stayed. (Doc. 14). In addition, Defendant contends Plaintiffs’ claims should be dismissed under FED.R.CIV.P. 12(b). (Doc. 5-7). Thus, the Court now considers: (1) whether the dispute resolution provision in the Agreement between PAA and BCBSTX is permissive or mandatory; (2) whether the dispute resolution provision applies to PAHR and POS; (3) if some claims are subject to the dispute Page 3 of 23 Case 3:10-cv-02652-L Document 26 Filed 06/27/11 Page 4 of 23 PageID 572 resolution provision, whether any remaining claims should be stayed; and (4) whether any of Plaintiffs’ claims not subject to mandatory dispute resolution should be dismissed pursuant to Defendant’s 12(b) motions. II. ANALYSIS A. The Dispute Resolution Provision The Court first addresses whether the dispute resolution provision in the Agreement is permissive or mandatory. It states: BCBSTX or [PAA], as the case may be, shall give Notice to the others of the existence of a dispute. In order to avoid the cost and time consuming nature of litigation, any dispute between BCBSTX and [PAA] arising out of, relating to, involving the interpretation of, or in any other way pertaining to this Agreement or any prior Agreement between BCBSTX and [PAA] shall be resolved using alternative dispute resolution mechanism instead of litigation. BCBSTX and [PAA] agree and acknowledge that it is their mutual intention that this provision be construed broadly so as to provide for mediation and/or arbitration of all disputes arising out of their relationship as third-party Payer and [PAA]. (Doc 8-1 at 15-16) (emphasis added). The agreement also allows PAA to subject certain disputes to an external review process that is binding on all the parties. (Doc. 8-1 at 16). If PAA does not make such election, the parties may agree to meet and attempt to resolve the dispute. (Doc. 8-1 at 16). “If no meeting is mutually agreed, or if the dispute is not resolved . the party giving the initial notice shall submit the dispute to mediation.” (Doc. 8-1 at 16) (emphasis added). Finally, “[i]n the event [PAA] ha[s] not made an External Review Election and mediation is not successful in resolving the dispute, either [party] may submit the dispute to final and binding arbitration.” (Doc. 8-1 at 16-17). Page 4 of 23 Case 3:10-cv-02652-L Document 26 Filed 06/27/11 Page 5 of 23 PageID 573 (1) As Applied To PAA Who is actually bound by an arbitration agreement is a function of the intent of the parties, as expressed in the terms of the agreement. Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347, 355 (5th Cir. 2003). Here, the Agreement explicitly provides that PAA and BCBSTX are bound by it. Both parties signed the Agreement, which states it “contains the entire understanding between the parties.” (See Doc. 8-1 at 17). It is also clear that the Agreement mandates the resolution of any disputes arising between the parties through the use of alternative dispute resolution, instead of litigation, and that PAA agreed to follow the procedures required in “Part X, General Provisions, Section 1, Dispute Resolution” should PAA have a complaint or a dispute arising from over payments, under payments, or deductions. (Doc. 8-1 at 8-10, 15). While Plaintiffs correctly point out the Agreement provides that “either [party] may submit the dispute to final and binding arbitration” if the other specified dispute resolution procedures are not successful (Doc. 8-1 at 16-17), that language in no way vitiates the requirement under the Agreement for mandatary dispute resolution. In fact, by signing the contract, PAA acknowledged that the “arbitration provision precludes [PAA] from filing an action at law or in equity and from having any dispute covered by [the] Agreement resolved by judge or jury.” (Doc. 8-1 at 17). Therefore, the Court concludes that the dispute resolution provision of the Agreement is mandatory as to PAA, and thus binds BCBSTX and PAA to resolve the current claims in accordance with the dispute resolution provision insofar as they concern the subject matter outlined in the Agreement. Plaintiffs also argue that their claims fall outside of the arbitration agreement because Page 5 of 23 Case 3:10-cv-02652-L Document 26 Filed 06/27/11 Page 6 of 23 PageID 574 their claims concern the “rate of compensation,” and are thus expressly excluded from the arbitration provision. The Court is not persuaded by this argument as the crux of Plaintiffs’ First Amended Complaint appears to be that Plaintiff’s were not paid for their services, rather than a disagreement with the rate of compensation for their services.
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