Supreme Court Reaffirms Broad Discretion to Arbitrators

The U.S. Supreme Court has issued yet another opinion affirming that arbitrators have wide discretion to decide disputes when parties enter into arbitration agreements in advance.  In the case of Oxford Health Plans LLC v. Sutter (No. 12-135), decided on June 10, 2013, a pediatrician sought to compel class arbitration of claims for breach of contract with Oxford Health Plans LLC, a health insurance company.  Oxford Health Plans argued that the arbitration agreement did not allow for class arbitration, but the arbitrator, after examining the agreement, found that the agreement did allow class arbitration.

Oxford Health Plans sought to vacate the arbitrator’s decision in federal court by claiming that he had exceeded his authority under the Federal Arbitration Act, which governs arbitration agreements that involve interstate commerce.  Once the dispute reached the Supreme Court, the Court ruled unanimously that a federal court did not have the authority to overturn the arbitrator’s decision regarding the interpretation of the parties’ arbitration agreement.  The Court reminded Oxford Health Plans that the Federal Arbitration Act “permits courts to vacate an arbitral decision only when the arbitrator strayed from his delegated task of interpreting a contract, not when he performed that task poorly.”

For those individuals or companies considering entering into an arbitration agreement, this case should serve as another reminder to weigh the risks and benefits first.  Arbitration can save time and money, but you are usually stuck without an appeal of the arbitrator’s decision even if the arbitrator did his or her job very poorly.

A complete copy of the Supreme Court’s decision can be accessed here:

David Dirr is a Northern Kentucky attorney practicing at Dressman Benzinger LaVelle and is a member of the firm’s healthcare and litigation practice groups.  He is licensed to practice in Ohio, Kentucky, and Indiana.  David concentrates his practice on the areas of Medicare and Medicaid reimbursement, anti-kickback law, the Stark law, and HIPAA.