Professor Sharon Reece on Oxford Health Plans v. Sutter

Professor Sharon Reece on Oxford Health Plans v. Sutter


In Oxford Health Plans v. Sutter [an enhanced version of this opinion is available to subscribers], the Supreme Court of the United States held that an arbitrator's determination that an agreement authorized class arbitration survived judicial review because the arbitrator made this determination by interpreting the agreement. As a result, the Court has preserved arbitrators' prerogative to broadly interpret agreements while simultaneously encouraging courtroom inquiries into the arbitrability of class determinations, in certain circumstances.

In 1998, Oxford Health Plans, LLC, and Dr. John Ivan Sutter entered a Primary Care Physician Agreement providing that Sutter would render health services to members of Oxford's managed care network in exchange for predetermined compensation rates. The agreement contained an arbitration clause stating: "No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the Rules of the American Arbitration Association with one arbitrator."

In April 2002, Sutter accused Oxford of improperly denying, underpaying, and delaying reimbursements. Sutter filed a complaint alleging breach of contract and additional violations of New Jersey law against Oxford and other health insurers on his own behalf and for a class of fellow providers. Oxford moved to compel arbitration. Sutter opposed, and urged the New Jersey Superior Court to refuse to enforce the arbitration clause or to refuse to certify the class. The court granted Oxford's motion and left class certification for the arbitrator to resolve.

The parties commenced arbitration with William L.D. Barrett, who determined on September 23, 2003, that the agreement allowed for class arbitration. Barrett approached the issue as a matter of contract construction; he looked to the text of the arbitration clause and found it was drafted to be as broad as possible. He reasoned that the statement that "[n]o civil action concerning any dispute arising under this Agreement shall be instituted before any court" embraced all possible court actions, including class actions, and that the parties therefore authorized class arbitration on the face of the agreement. He incorporated this construction of the arbitration clause into his Partial Final Class Determination Award on March 24, 2005. [footnotes omitted]

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