WASHINGTON, Oct. 15 (UPI) -- The Supreme Court Tuesday agreed to determine when an arbitrator may step in and resolve a dispute, even if the arbitrator cannot award punitive damages normally allowed by federal law.
The Miami case involves racketeering and other claims made by doctors in California, Colorado, Florida, Kentucky and Texas against some health care companies.
The doctors claimed to have been victimized by automated claims processing schemes developed and implemented by the companies and other managed care organizations. The schemes allegedly were designed to deprive the doctors of payment for rendering insurance-covered, medically necessary services to their patients.
Cases filed throughout the country were consolidated and heard in Miami.
At that point, the doctors amended their complaint to include alleged violations of the Racketeer Influenced and Corrupt Organizations Act. Under the law's civil provisions, plaintiffs can be awarded triple damages.
However, some of the doctors had contracts with their HMOs that included arbitration clauses, and some of those clauses placed limits on damages an arbitrator could award.
A federal judge ruled that arbitration clauses that excluded punitive damages were unenforceable when a plaintiff doctor made complaints under a federal law that included punitive damages, such as RICO. A federal appeals court in Atlanta upheld the judge.
The HMOs then asked the Supreme Court to review the case.
In a petition to the justices, the HMOs said the decision by the 11th U.S. Circuit Court of Appeals in Atlanta conflicts with rulings in other U.S. circuits. In addition, the petition said, the 11th Circuit ruling, "undermines the critical role that the (Federal Arbitration Act) plays in promoting alternative dispute resolution."
Among other things, the act says that 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." In other words, the only terms that limit an arbitration contract would be contained in the contract itself.
The Supreme Court agreed to review the case in a one-line order released Tuesday. Though not yet scheduled, argument should be heard sometime this winter or early spring.
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(No. 02-215, In re Humana Inc. Managed Care Litigation, PacifiCare Health Systems Inc. et al vs. Jeffrey Book, O.D., et al)
