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Pennsylvania Chiropractic Association, et al v. Blue Cross Blue Shield Association

January 20, 2011

PENNSYLVANIA CHIROPRACTIC ASSOCIATION, ET AL., PLAINTIFFS,
v.
BLUE CROSS BLUE SHIELD ASSOCIATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

The plaintiffs in this case are chiropractic physicians and an occupational therapist who have provided services to members of health care plans insured or administered by the defendants, professional associations whose members are chiropractic physicians, a residential treatment facility, and one subscriber to a health care plan.*fn1 The defendants are Blue Cross and Blue Shield of America (BCBSA) and individual Blue Cross and Blue Shield entities (BCBS entities). BCBSA is a national umbrella organization that facilitates the activities of individual BCBS entities. Individual BCBS entities insure and administer health care plans to Blue Cross and Blue Shield customers (BCBS insureds) in various regions.

Plaintiffs allege that defendants improperly took money belonging to plaintiffs. They allege that defendants would initially reimburse plaintiffs for services they provided to BCBS insureds and then sometime afterward would make a false or fraudulent determination that the payments had been in error and would demand repayment from plaintiffs. If plaintiffs refused to return the payment as demanded, defendants would force recoupment by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds. The subscriber plaintiff, Katherine Hopkins, who recently intervened in the case, alleges that she was held liable for portions of a bill for services she received at a hospital after her insurer demanded recoupment from the chiropractic provider who treated her.

Plaintiffs filed their first amended complaint on November 16, 2009. In it, plaintiffs alleged that defendants' actions violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Employee Retirement Income Security Act (ERISA), as well as Florida state law. On May 17, 2010, the Court granted a motion by defendants to dismiss the RICO claims for failure to state a claim.

Plaintiffs filed a second amended complaint on June 29, 2010. The second amended complaint reasserted the RICO and ERISA claims from the first amended complaint. Plaintiffs added a claim of RICO conspiracy and an ERISA claim on behalf of Hopkins and the putative class of subscribers she represents. The Court granted a motion by defendants to dismiss the RICO claims and Hopkins' ERISA claim against WellPoint, Inc., a BCBS entity.

On July 27, 2010, defendants filed a motion to dismiss the second amended complaint on various grounds pursuant to Federal Rule of Civil Procedure 12(b)(6).

This decision addresses defendants' motion to dismiss the claims asserted by plaintiff Dr. Peri Dwyer and associational plaintiffs Florida Chiropractic Association (FCA) and International Chiropractors Association (ICA), or, in the alternative, to compel arbitration. For the reasons stated below, the Court denies the motions.

Discussion

1. Motion regarding Dwyer and FCA

Defendants move to dismiss Dwyer and FCA's claims, or, in the alternative, compel arbitration of those claims, on the ground that Dwyer and FCA members entered into mandatory arbitration agreements with defendant Blue Cross and Blue Shield of Florida, Inc. (BCBSF). In response, Dwyer and FCA assert that defendants forfeited their right to arbitration.

The Federal Arbitration Act (FAA) declares that as a matter of federal law, arbitration agreements "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. There is a presumption in favor of arbitrability: "as with any other contract, the parties' intentions control, but those intentions are generously construed as to issues of arbitrability." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985).

"A party may waive a contractual right to arbitrate expressly or implicitly." Halim v. Great Gatsby's Auction Gallery, 516 F.3d 557, 562 (7th Cir. 2008) (citation omitted). To determine whether a party has waived arbitration, courts "examine the totality of the circumstances and determine whether . . . the party . . . has acted inconsistently with the right to arbitrate." Sharif v. Wellness Int'l Network, Ltd., 376 F.3d 720, 726 (7th Cir. 2004) (internal citation omitted). "Although several factors may be considered in determining waiver, diligence or the lack thereof should weigh heavily in the decision -- 'did that party do all it could reasonably have been expected to do to make the earliest feasible determination of whether to proceed judicially or by arbitration?'" Ernst & Young LLP v. Baker O'Neal Holdings, Inc., 304 F.3d 753, 756 (7th Cir. 2002) (emphasis removed) (quoting Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 391 (7th Cir. 1995)).

Plaintiffs assert that defendants waived their right to arbitration by waiting nearly eight months to request arbitration and by, in the interim, filing comprehensive motions to dismiss Dwyer and FCA's claims on the merits. The Court first considers the issue of defendants' delay.

"[L]engthy delay can lead to an implicit waiver of arbitration." Welborn Clinic v. Medquist, Inc., 301 F.3d 634, 637 (7th Cir. 2002) (citation omitted). In Cabinetree, the Seventh Circuit held that a party waived its right to arbitrate when it removed a case to federal court and waited eight months before ...


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