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Border Area Mental Health, Inc. v. United Behavioral Health, Inc.

United States District Court, D. New Mexico

May 28, 2019

BORDER AREA MENTAL HEALTH, INC., COUNSELING ASSOCIATES, INC., EASTER SEALS EL MIRADOR, FAMILIES & YOUTH, INC., HOGARES, INC., SOUTHWEST COUNSELING CENTER, INC., SOUTHERN NEW MEXICO HUMAN DEVELOPMENT, INC., TEAMBUILDERS COUNSELING SERVICES, INC., THE COUNSELING CENTER, INC., and VALENCIA COUNSELING, INC., Plaintiffs,
v.
UNITED BEHAVIORAL HEALTH, INC. and UNITED HEALTHCARE INSURANCE COMPANY, INC., d/b/a OPTUMHEALTH NEW MEXICO, PUBLIC CONSULTING GROUP, INC., ELIZABETH A. MARTIN, ANDREW SEKEL, TIMOTHY S. MILLER, and JOHN DOES 1-10, Defendants.

          MEMORANDUM OPINION AND ORDER

          MARTHA VÁZQUEZ, UNITED STATES DISTRICT JUDGE

         THIS MATTER comes before the Court on Plaintiffs' Motion to Set Aside the Opinion of the Arbitrator [Doc. 60]. The Court, having considered the motion, briefs, and relevant law, and being otherwise fully informed, finds that the Motion is not well-taken and will be denied.

         BACKGROUND

         OptumHealth New Mexico “(“OHNM”) is a joint venture that was formed by United Behaviorial Health, Inc. and United Healthcare Insurance Company, Inc. Doc. 6-1 at ¶ 3. In 2009, OHNM entered into a “Statewide Contract” with the New Mexico Inter-Agency Behavioral Health Purchasing Collaborative (the “Collaborative”) to manage New Mexico's Medicaid and state-funded programs. Id. at ¶ 4. Pursuant to the Statewide Contract, from 2009 through December 31, 2013, OHNM served as the “Statewide Entity” to administer the delivery of behavioral health services to individuals enrolled in and eligible to receive services under the Collaborative's agency programs. Id.

         In turn, in its capacity as the Statewide Entity, OHNM entered into contracts with numerous healthcare providers, including Plaintiffs, to provide the necessary behavioral health and/or substance abuse health care services to the individual enrollees. Id. at ¶ 5. Each of the “Provider Agreements” and “Facility Participation Agreements” between Plaintiffs and OHNM includes an arbitration provision, which states in relevant part that, in the event the parties were unable to resolve “any disputes about their business relationship, ” those disputes would be “submitted to binding arbitration in accordance with the rules of the American Arbitration Association (“AAA”). Doc. 61, Ex. 1 at Art. 30; Doc. 6-1, Ex. 2 at Section 8.

         Plaintiffs allege that OHNM mismanaged its Statewide Contract and, in order to cover up its mismanagement, accused its healthcare providers, including Plaintiffs, of engaging in institutional fraud. Doc. 1-1 at ¶¶ 36, 43. Plaintiffs further allege that OHNM audited Plaintiffs with the predetermined outcome of finding “credible allegations of fraud, ” in order to trigger the suspension of payments to Plaintiffs for the healthcare services that they had provided pursuant to their contracts with OHNM. Id. at ¶¶ 52-55. As a result, Plaintiffs allege, they are owed payments totaling $11.5 million. Id. at ¶ 62.

         Based on these allegations, Plaintiffs commenced the instant action in the First Judicial District Court of New Mexico, Santa Fe County, on June 23, 2016, against United Behavioral Health and United Healthcare Insurance Company, doing business as OHNM, Elizabeth Martin, Chief Executive Officer of OHNM, Andrew Sekel, Chief Executive Officer of OptumHealth Behavioral Solutions, and Timothy S. Miller, regional manager for OHNM, collectively referred to as the “United Defendants, ” in addition to the Public Consulting Group, the entity that was hired to conduct the audits of Plaintiffs. Doc. 1-1. On November 3, 2016, United Defendants removed the action to this Court. Doc. 1. In their Complaint, Plaintiffs allege claims against United Defendants for interference with contractual relations, prima facie tort, civil conspiracy to commit interference with contractual relations and prima facie tort, and violations of the New Mexico Unfair Practices Act. Doc. 1-1 at ¶¶ 67-89.

         On November 18, 2016, United Defendants filed a motion to compel Plaintiffs to arbitrate the claims alleged against them. Doc. 6. In support of their motion, United Defendants argued that the agreements into which each Plaintiff had entered contained valid and binding arbitration provisions, and that Plaintiffs' claims fell directly within the scope of those provisions. Id. Plaintiffs did not dispute that they entered into valid arbitration agreements, but opposed United Defendants' motion to compel on the basis that their claims did not bear a reasonable relationship to the subject matter of the arbitration agreements and thus did not fall within the scope of those agreements. Doc. 29 at 4-10; Doc. 30 at 3-10.

         In a Memorandum Opinion and Order entered March 28, 2018, the Court granted United Defendants' motion to compel, explaining that, by incorporating the AAA Rules into the arbitration provisions set forth in the relevant agreements, Plaintiffs and United Defendants “clearly and unmistakably” agreed to arbitrate arbitrability. Doc. 46. Accordingly, the Court further explained, all questions of arbitrability - including the questions Plaintiffs raised as to whether their claims reasonably relate to the subject matter of the parties' agreements to arbitrate - must be resolved by an arbitrator. Id. Under controlling Tenth Circuit precedent, the Court found that it had no discretion to decide whether Plaintiffs' claims were outside the scope of the arbitration provisions in the relevant agreements, but rather was obligated to defer that determination to the arbitrator. Id. Accordingly, the Court found no basis to deny United Defendants' motion compelling arbitration of Plaintiffs' claims against it. Id.

         On June 11, 2018, Plaintiffs initiated an arbitration proceeding with the AAA, and requested that the Arbitrator declare that their claims against United Defendants are not subject to arbitration. The Arbitrator, Judge Bruce. D. Black (Retired), ordered the parties to submit briefing on the threshold issue of arbitrability. Thereafter, on December 5, 2018, the Arbitrator issued his Opinion on Arbitrability. Doc. 60-4. The Arbitrator determined that the claims asserted by Plaintiffs against United Defendants fall within the scope of the arbitration provision in the relevant agreements, and thus must be pursued solely through binding arbitration. Id. On the instant motion, Plaintiffs request that this Court “vacate the Arbitrator's decision and allow the parties to litigate, in this Court, ” Plaintiffs' claims against United Defendants. Doc. 60 at 3. United Defendants oppose this request.

         DISCUSSION

         I. There is No. Basis to Set Aside the Arbitrator's Decision

         A. Legal Standard

         “Judicial review of arbitration [] decisions is extremely limited; indeed, it has been described as ‘among the narrowest known to law.'” Dominion Video Satellite, Inc. v. Echostar Satellite, L.L.C., 430 F.3d 1269, 1275 (10th Cir. 2005) (quoting Bowen v. Amoco Pipeline Co., 254 F.3d 925, 932 (10th Cir. 2001)). Under Section 10 of the Federal Arbitration Act (“FAA”), “vacation of an arbitration award is only proper in a few instances that include fraud, corruption, arbitrator misconduct [including the refusal to hear evidence pertinent and material to the controversy], and arbitrator overreach.” Dominion Video, 430 F.3d at 1275 (quoting Bowen, 254 F.3d at 932); 9 U.S.C.§ 10. “Various courts have determined that vacation is also appropriate when the arbitration award violates public policy, when the arbitrator did not conduct a fundamentally fair hearing, or when an arbitrator's decision is ‘based on an “manifest disregard” of the law, defined as “willful inattentiveness to the governing law.'” Dish Network, L.L.C. v. Ray, 900 F.3d 1240, 1243 (10th Cir. 2018) (quoting Chevron Mining Inc. v. United Mine Workers of Am., Local 1307, 648 F.3d 1151, 1154 (10th Cir. 2011)). Mere “errors in either the arbitrator's factual findings or his interpretation of the law ...


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