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SCOTUS: Class Arbitration Upheld in Physician-Insurer Case

Margaret Dick Tocknell, for HealthLeaders Media, June 12, 2013

Class arbitration has been upheld by the U.S. Supreme Court in a case involving a dispute over payments to physicians by a health plan.

In a unanimous decision, the U.S. Supreme Court Monday affirmed an arbitrator's ruling to permit class arbitration of a physician-insurer dispute even when the two parties had not expressly agreed to that procedure.

In the case, which dates back to 2003, John Sutter, a New Jersey pediatrician, contended that he and other physicians were underpaid by Oxford Health Plans, LLC.

According to court documents Dr. Sutter provided medical services to Oxford Health Plan members under a fee-for-service contract that "required binding arbitration of contractual disputes." alleging that Oxford failed to fully and promptly pay him, however, he filed a proposed class action in New Jersey Superior Court,

The New Jersey court sent the matter to arbitration The arbitrator concluded that class arbitration was authorized, and Oxford filed a motion in federal court to vacate the arbitrator's decision, claiming that he had "exceeded [his] powers." The U.S. District Court denied the motion, which the Third Circuit Court of Appeals affirmed.

As might be expected, the American Medical Association and the Medical Society of New Jersey, which submitted a brief amici curiae to the Supreme Court on behalf of Dr. Sutter, heralded the decision. "This important ruling allows thousands of physicians to use class arbitration against a health insurer that has underpaid them for more than a decade," said AMA President Jeremy A. Lazarus, MD, in a press statement. "Without this broad-scale arbitration, physicians would have no practical means of challenging a health insurer's unfair payment practices."

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