N.D. of Texas Compels Arbitration and Urges Mediation in Infectious Disease Doctors’ Insurance Dispute

The Northern District of Texas has ordered a portion of a dispute between a medical practice and an insurance company to arbitration and urged the parties to mediate their remaining claims.  In Infectious Disease Doctors P. A. v. Bluecross Blueshield of Texas, No. 3:13-CV-02920-L (N. D. Tex., September 30, 2014), an infectious disease medical practice, Infectious Disease Doctors (“IDD”), sought payment from Bluecross Blueshield of Texas (“BCBSTX”) for services rendered to patients in Texas by several of the practice’s 11 physicians between 2009 and 2013. Before the dispute arose, three of the IDD physicians signed a group managed care agreement with BCBSTX and Genesis Physician’s Group. Under the terms of the contracts, the doctors agreed to treat patients who were insured by BCBSTX and the insurer agreed to pay them for the services rendered. The three physicians also claimed they signed a Physician HMO Contract with BCBSTX in 2001.

According to IDD, the doctors were not paid for treatment provided to individuals who were insured by a Bluecross Blueshield plan based in another state. IDD argued that the practice properly submitted bills to BCBSTX because the services were provided in Texas despite the fact that the patient’s out-of-state plan was ultimately responsible for payment. While the dispute was ongoing, six of IDD’s doctors signed an individual Physician PPO Contract and a Physician HMO Contract with BCBSTX. Two IDD doctors never signed a provider agreement with the insurer. Because of this, some of the disputed claims arose while the treating physician was not a part of BCBSTX’s provider network.

Ultimately, IDD filed a lawsuit in the Northern District of Texas seeking compensation from the insurer for the unpaid claims that arose while the treating doctors were not a part of BCBSTX’s network. In IDD’s complaint, the medical practice alleged BCBSTX breached the parties’ contract, and violated the Texas Insurance Code, the federal Employee Retirement Income Security Act (“ERISA”) and the Federal Employee Health Benefit Plan Act (“FEHBA”). The medical provider asked the court to award it any unpaid fees as well as statutory and other damages.

In response, BCBSTX filed a motion to compel arbitration and dismiss the case. In considering the insurer’s motion, the federal court stated there were several arbitration agreements at issue in the lawsuit. In addition, the court said IDD sought to recover for three separate types of insurance claims submitted to BCBSTX. After examining the terms of each agreement, the Northern District of Texas ordered IDD to arbitrate those claims submitted to BCBSTX pursuant to the Genesis PPO agreement. This included, “Plaintiff’s allegations of breach of the Genesis PPO Agreement and Texas Insurance Code violations.”

Next, the court addressed the claims that were submitted by in-network physicians prior to becoming a part of the BCBSTX network.  The federal court refused to compel arbitration against a doctor who was currently a network provider but was one not during the relevant time frame.  Still, the court granted the insurer’s motion to compel arbitration for those medical providers who signed a Physician HMO and PPO Contract before the lawsuit was filed.  According to the Northern District of Texas,

The language in the Physician HMO Contract and Physician PPO Contract evidences an intent to apply the arbitration clauses broadly. The arbitration clauses in the Physician HMO Contract and Physician PPO Contract are different from the Genesis Agreements because the parties specifically state their intent to arbitrate “all disputes arising out of their relationship as third-party Payer and Physician.” Id. Thus, the Physician HMO contract and Physician PPO Contract are broad enough to encompass the insurance claims submitted by these doctors when they were out-of-network because the claims still arise from their relationship as third-party payer and physician.

The court also denied the insurer’s motion to compel arbitration of the insurance claims submitted by IDD’s out-of-network doctors by stating,

Defendant also argues that the claims submitted by the out-of-network physicians should proceed to arbitration under a direct benefits theory of estoppel, which applies when “a nonsignatory knowingly exploits the agreement containing he arbitration clause.’” Id. at 362. Plaintiff, however, has not exploited any agreement with BCBSTX with respect to the claims submitted by the out-of-network doctors. Plaintiff has not argued or alleged that BCBSTX breached a specific agreement with the out-of-network physicians, because there is simply no agreement between the out-of-network physicians and BCBSTX to breach. By its own admission, Plaintiff acknowledges that it is obligated to arbitrate its disputes when it exploits agreements with binding arbitration clauses. For example, by seeking payment for claims submitted by physicians in the HMO network, Plaintiff seeks to exploit and receive the benefits from the Physician HMO Contract, and Plaintiff acknowledges that it must proceed to arbitration for those claims. For the out-of-network doctors, there is no analogous agreement to exploit. Accordingly, the court will deny Defendant BCBSTX’s Motion to Compel Arbitration for the insurance claims submitted by the out-of-network doctors.

Finally, the Northern District of Texas granted the insurer’s motion to dismiss the lawsuit with regard to those claims that were ordered to arbitration and urged the parties to engage in mediation over the remaining issues that were not subject to arbitration.

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