The high court has handed down its decision in Oxford Health Plans v. Sutter, a case that employers had been closely watching. And, well, the news isn’t so great.
First, some background. In the case, a doctor sued Oxford Health Plans in state court on behalf of a proposed class of physicians who claimed the health insurer underpaid them. Oxford moved the case into arbitration per a contract to which the physicians had agreed. The arbitrator ruled that the physicians could pursue arbitration against Oxford as a class, even though the contract’s arbitration clause didn’t address class arbitration. A trial court and the 3rd Circuit both affirmed the ruling. The case went to the Supreme Court, which heard arguments in March.
Various groups, including the Chamber of Commerce, the Equal Employment Advisory Committee and the Voice of the Defense Bar, filed amicus briefs in support of Oxford. They said the benefits of arbitration could disappear if the high court ruled for the plaintiffs.
“If plaintiffs’ lawyers figure out they could pursue a class arbitration, employers could be more liable more often (and) arbitration could be less cheap,” Saint Louis University School of Law Professor Marcia McCormick told Thomson Reuters in March. “I think [employers] are worried about plaintiffs figuring out this is an option and taking advantage of it.”
But yesterday, the high court unanimously ruled that the group of doctors could collectively arbitrate the dispute. Writing on behalf of the court, Justice Elena Kagan said the court had limited ability under the Federal Arbitration Act to review an arbitrator’s decision finding that a contract allows for class arbitration.
Although the effects of the decision remain to be seen, Mayer Brown Partner Andrew Pincus told Thomson Reuters that if employers want to prohibit class arbitration, “they should say so explicitly in their arbitration agreements.”
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