Health First v. Hynes
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IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
JANUARY TERM 2008
HEALTH FIRST, INC., ET AL,
Appellant,
v.
Case No. 5D07-3370
RICHARD A. HYNES, M.D.,
FACS, ET AL.,
Appellee.
________________________________/
Opinion filed June 6, 2008
Non-Final Appeal from the Circuit Court
for Brevard County,
Robert Wohn, Jr., Judge.
Jerome W. Hoffman, Steven L. Brannock
and David C. Borucke of Holland & Knight, LLP,
Tallahassee, for Appellant.
S. Sammy Cacciatore of Nance, Cacciatore,
Hamilton, Barger, Nance & Cacciatore,
Melbourne, and William G. Kopit of Epstein
Becker & Green, P.C., Washington, D.C., for Appellee.
PALMER, C.J.,
Health First, Inc. (Health) appeals the non-final order entered by the trial court
denying, in part, Health’s motion to compel arbitration.1 We affirm.
Richard A. Hynes, M.D. FACS, and Brevard Orthopedic Spine and Pain Clinic,
Inc., f/k/a Brevard Orthopedic Clinic, Inc., d/b/a the B.A.C.K. Center (collectively Hynes)
filed a complaint against Health alleging 12 counts, including monopolization of the
1
This court has jurisdiction pursuant to Florida Rule of Appellate Procedure
9.130(a)(3)(C)(iv).
hospital market, attempting to monopolize the market for hospital services, restraint of
trade, conspiracy to monopolize, unfair competition, deceptive and unfair trade
practices, and tortious interference with business relationships. In response, Health filed
a motion seeking to compel mediation and arbitration pursuant to the terms of a
Participating Group Agreement that Hynes had entered into with the B.A.C.K. Center. 2
That agreement contained a dispute resolution provision which applied to “any dispute
arising out of or relating to this Agreement.”
After considering the arguments presented by the parties, the trial court granted
Health’s motion to arbitrate the tortious interference count, but denied the motion as to
all other counts, ruling:
Having reviewed Counts I through XI of the Complaint, the
Court finds that those counts are not based on the
Participating Group Agreement entered into by the Plaintiff,
The B.A.C.K. Center, and the Defendant, Health First Health
Plans, Inc. The Court finds that there is an insufficient nexus
between the allegations in the pleadings and any of the
causes of action pleaded in Counts I through XI to the
Participating Group agreement. The Plaintiffs in those counts
are not attempting to enforce the agreement. Any mention of
or reference to the Agreement was made only as an
example of anti-competitive conduct and/or unfair trade
practices. The Court therefore finds that these counts (I
through XI) are unrelated to the Agreement between the
parties. The Court further finds, though, that in regard to
Count XII that the tortious conduct alleged in that claim was
based on and does have a sufficient relationship to the
Participating Group Agreement between the Plaintiffs, The
B.A.C.K. Center and Richard A. Hynes, and the Defendants.
On appeal, the first issue raised by Health is whether the Federal Arbitration Act
(FAA), 9 U.S.C. §2, should apply to this case. The FAA applies by its terms to an
2
The B.A.C.K. Center is described as a professional corporation that employed
physicians including Dr. Hynes.
2
arbitration clause in any contract involving interstate commerce. Section two of the FAA
provides:
§ 2. Validity, irrevocability,
agreements to arbitrate
and
enforcement
of
A written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such
contract or transaction, or the refusal to perform the whole or
any part thereof, or an agreement in writing to submit to
arbitration an existing controversy arising out of such a
contract, transaction, or refusal, 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.
Health claims that the FAA should apply to this case because the Participating
Group Agreement “encompassed the treatment of Medicare patients”, thus indicating
that an act of interstate commerce occurred upon the B.A.C.K. Center's receipt of
Medicare funds. However, no evidence was presented by Health which demonstrated
that the B.A.C.K. Center ever received payment from Medicare, and the Participating
Group Agreement states that Health was the entity that received the Medicare funds
and then reimbursed the B.A.C.K. Center. Thus, any interstate commerce would have
been between Medicare and Health, not between Health and the B.A.C.K. Center.
Accordingly, Florida law applies to the determination of the arbitrability of the claims at
issue.
When determining whether a claim must be submitted to arbitration, Florida
courts use the term “nexus” to describe the relationship between the dispute and the
contract containing the arbitration clause. See Seifert v. U.S. Home Corp., 750 So.2d
633 (Fla. 1999)(holding the determination of whether a particular claim must be
3
submitted to arbitration necessarily depends on the existence of some nexus between
the dispute and the contract containing the arbitration clause).
Review of the complaint filed by Hynes indicates that the trial court properly
found that there was no nexus between the allegations in Counts I through VI of the
complaint and the Participating Group Agreement. Specifically, in Counts I through VI,
Hynes alleged violations of section 542.19 of the Florida Statutes which provides:
542.19. Monopolization; attempts, combinations, or
conspiracies to monopolize
It is unlawful for any person to monopolize , attempt to
monopolize, or combine or conspire with any other person or
persons to monopolize any part of trade or commerce in this
state.
§ 542.19, Fla. Stat. (2006).
In regards to these counts, the Participating Group Agreement was only
mentioned by Hynes as an example of Health’s anti-competitive, deceptive, and
monopolistic behaviors. Other claims of misconduct contained in those counts of the
complaint were based on duties owed to the public under common law or public policy,
including Health’s exclusive power to approve provider panel participation, charging
higher rates to independent commercial managed care health insurers, steering
Medicare patients exclusively to Health hospitals, restricting meaningful patient choice
in hospital selection, misleading and deceptive advertising, exclusionary conduct to limit
choices available to physicians and patients, unjustified expenditures, building new
hospitals to completely take over hospital care in southern Brevard County, insensitivity
to patient needs, failure to remove a dead body from a patient’s room, failure to employ
an adequate number of nurses, initiating an aggressive regulatory challenge to stop
4
Health’s competitor from building a hospital in Brevard County, entering into joint
ventures with favored physicians, diverting small group managed care enrollees to
Health, and instituting dangerous budget cuts which effected patient care. These claims
do not set forth a nexus between Hynes and the Participating Group Agreement.
Regarding counts VII through XI, Hynes alleged violations of section 501.204(1)
of the Florida Statutes, Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA)
which provides:
501.204. Unlawful acts and practices
(1) Unfair methods of competition, unconscionable acts or
practices, and unfair or deceptive acts or practices in the
conduct of any trade or commerce are hereby declared
unlawful.
§ 501.204(1), Fla. Stat. (2006).
A review of counts VII through XI of the complaint indicates that the trial court
properly denied Health’s motion to compel arbitration on these counts. These counts
were brought as potential class actions on behalf of employers incorporated in, or
otherwise organized under, the laws of Florida which purchase hospital services in
South Brevard County for their employees through the payment of premiums for health
care coverage. As the trial court found in its order, the Participating Group Agreement
was only one example of Health’s alleged violation of FDUPTA. Hynes raised other
allegations including claims that Health provided favored physicians with the opportunity
to enter into joint ventures with Health, lessened patient choice by excluding certain
health plans, caused higher prices and fewer alternatives for patients seeking hospital
services, excluded providers from participating in provider panels unless they were
approved by Health, punished physicians for disloyalty to Health by excluding them from
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purchasing health benefits from Health, charged very high, discriminatory, supra
competitive hospital rates to independent commercial managed care health insurers,
steered patients exclusively to Health hospitals, attempted to prohibit hospital
competition in South Brevard County, engaged in misleading and deceptive public
relations and advertising, provided Health top leadership with millions of dollars in
lucrative compensation, limited competition between Wuesthoff’s Rockledge facility and
Cape Canaveral Hospital by forced “bundling” of all Health hospitals, prohibited others
from building a hospital in Viera, provided benefits to physicians who utilize Health
hospitals, threatened to bring in their own employed physicians to compete with
physicians who do not comply with Health’s demands, and paid physicians to bring
patients to Health hospitals. None of these allegations demonstrate a nexus between
Hynes and the Participating Group Agreement.
AFFIRMED.
SAWAYA and COHEN, JJ., concur.
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