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IMA, Inc. v. Columbia Hospital Medical City At Dallas

United States District Court, S.D. Texas, Houston Division

December 23, 2019

IMA, INC., Plaintiff,
v.
COLUMBIA HOSPITAL MEDICAL CITY AT DALLAS, SUBSIDIARY, L.P., d/b/a Medical City Dallas Hosp., Defendant.

          MEMORANDUM AND ORDER

         This case is before the Court on the Motion to Stay and Compel Arbitration (“Motion”) [Doc. # 9] filed by Defendant Columbia Hospital Medical City at Dallas, Subsidiary, L.P. d/b/a Medical City Dallas Hospital (“Columbia”). Plaintiff IMA, Inc. (“IMA”) filed a Response [Doc. # 14], and Defendant filed a Reply [Doc. # 15].[1] Having reviewed the full record and the applicable legal authorities, the Court denies the Motion.

         I. BACKGROUND

         IMA is the third-party administrator of the Central Management Company, LLC Employer Health Plan (the “CMC Plan”). Columbia provided medical services to a CMC Plan member, and believes IMA incorrectly processed the claim for reimbursement.

         Effective April 1, 2012, Healthsmart Preferred Care, Inc. (“Healthsmart”) and HCA North Texas Division, Inc. (“HCA”) entered into a Hospital Agreement (“Hospital Contract”), attached to the Complaint [Doc. # 1] as Exhibit 2. Neither Columbia nor IMA is a party to the Hospital Contract, but Exhibit B to the Hospital Contract identifies codes and reimbursement rates for certain services when provided by Columbia (“Medical City Dallas Hospital”). The Hospital Contract contains a Dispute Resolution section that provides for binding arbitration. See Hospital Contract, ¶ 5.7(2).

         Almost ten years earlier, IMA had entered into a TPA (Third Party Administrator) Agreement (“IMA Contract”) with PPOplus, LLC (“PPO”), which IMA signed on December 19, 2002. Under the IMA Contract, IMA agreed to pay claims of Participating Providers (defined to include a hospital “who has entered into a contractual agreement with PPO to provide Covered Services to Beneficiaries”) “in accordance with the applicable Plan and the PPO Contracted Rates.” See IMA Contract [Doc. # 1-3], ¶ 2.2. “Plan” is defined in the IMA Contract to mean a health benefits plan that has entered into an agreement with IMA (which would include the CMC Plan), and “PPO Contracted Rates” is defined to mean “the rates or fees agreed upon by PPO and Participating Provider.” See id., ¶ 1.9; ¶ 1.8. The IMA Contract does not contain an arbitration provision.

         Previously, in July 2002, PPO had entered into a Network Cross Access Agreement (“Network Agreement”) with Healthsmart, a party to the 2012 Hospital Contract. In the Network Agreement, Healthsmart and PPO agreed to the “repricing of claims in conformity with the provisions of Schedule C . . ..” See Network Agreement, ¶ 6(c). Therefore, as of July 2002, it appears that PPO agreed to reimburse Participating Hospitals in the Healthsmart network at the rate set forth in Schedule C to the Network Agreement. It appears also that Healthsmart and HCA agreed to different reimbursement rates, attached to the Hospital Contract as Exhibit B, when they entered into the April 2012 Hospital Contract. The reimbursement rates, whether from the Network Agreement in 2002 or the Hospital Contract in 2012, are contained in an attachment to the relevant contract, and are not set forth in the contracts themselves.

         In July 2019, Columbia filed a demand for arbitration with the American Arbitration Association. Columbia claims that IMA is obligated to pay for the medical services Columbia provided to a CMC Plan member, and that IMA is required to arbitrate the dispute. Columbia bases its claim that IMA is required to participate in arbitration on the Dispute Resolution section of the 2012 Hospital Contract between Healthsmart and HCA.

         IMA filed this lawsuit seeking a declaratory judgment that it is not obligated to arbitrate the dispute with Columbia. Columbia filed the Motion to Stay and Compel Arbitration, which has been fully briefed and is now ripe for decision.

         II. STANDARD FOR MOTION TO COMPEL ARBITRATION

         Congress in enacting the Federal Arbitration Act (the “Act”) directed courts to treat arbitration agreements as “valid, irrevocable, and enforceable.” See Epic Sys. Corp. v. Lewis, __ U.S. __, 138 S.Ct. 1612, 1621 (2018) (citing 9 U.S.C. § 2). The Act establishes “a liberal federal policy favoring arbitration agreements.” Id. (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)).

         The first inquiry in deciding a request to compel arbitration is whether the parties entered into an agreement to arbitrate. See Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016); Trammell v. AccentCare, Inc., 776 Fed.Appx. 208, 209 (5th Cir. June 7, 2019). “Arbitration is ‘a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'” PaineWebber Inc. v. The Chase Manhattan Private Bank (Switzerland), 260 F.3d 453, 462 (5th Cir. 2001) (quoting United Steelworkers of Amer. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)). “Although there is a strong federal policy favoring arbitration, this federal policy favoring arbitration does not apply to the determination of whether there is a valid agreement to arbitrate between the parties.” Will-Drill Resources, Inc. v. Samson Resources Co., 352 F.3d 211, 214 (5th Cir. 2003) (internal quotations and citations omitted).

         III. ANALYSIS

         Columbia admits, as it must, that IMA is not a party to the Hospital Contract. Columbia argues that IMA is nonetheless required to arbitrate this dispute because the Hospital Contract and the IMA Contract are “unified, ” and because IMA accepted direct benefits under the Hospital Contract.

         A. Unified ...


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