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Desselle v. Ivy Creek Healthcare LLC

United States District Court, M.D. Alabama, Northern Division

December 2, 2019

IVY CREEK HEALTHCARE LLC, d/b/a Physical Express LLC, Defendant.



         Plaintiff Stephanie M. Desselle filed this lawsuit against her former employer defendant Ivy Creek Healthcare LLC, doing business as Physical Express LLC, charging violations under the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. §§ 1001-1461. She asserts three claims: interference with her ERISA rights, retaliation for exercising her rights, and wrongful denial of benefits. The court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1331 (federal question) and 29 U.S.C. § 1132(e)(1) (ERISA enforcement).

         This lawsuit is before the court on Ivy Creek's motion to stay the proceedings and compel arbitration. For the reasons that follow, the court will grant the motion as to Desselle's interference and retaliation claims and deny the motion as to her denial-of-benefits claim.

         I. BACKGROUND

         Ivy Creek employed Desselle as a medical assistant beginning in early 2014. Desselle alleges that, on August 1, 2018, despite being offered a raise for her “performance and dedication” to Ivy Creek a few months prior, she was terminated. Compl. (doc. no. 1) at ¶ 11. She asserts that Ivy Creek terminated her employment to prevent her from using health-insurance benefits to cover her son's scheduled heart surgery.

         Desselle also claims that her former employer denied her continuing, post-termination healthcare benefits. Her allegations relevant to this claim are as follows: Desselle's son was scheduled for heart surgery at Children's Hospital on August 21, 2018. Prior to that date, she twice inquired of Ivy Creek as to the status of her post-termination health insurance and received no response. On August 16, the hospital called and informed her that her insurance was cancelled as of July 31--the day before she was terminated. She then made two more inquiries of Ivy Creek about her post-termination insurance coverage. On August 30, she received post-termination coverage documentation and the next day she express-mailed the completed paperwork and payment. On September 6, the hospital informed her that her insurance was still not active. She called the insurance office and was informed that the payment was received, but that Ivy Creek, which is self-insured, had not processed the request. Sometime later, the insurance representative told she that Ivy Creek denied coverage for the policy.

         Desselle first executed an application for enrollment in healthcare benefits in August 2016. The application contained a clause mandating arbitration of disagreements with an exception for “a claim for benefits under section 502(a) of ERISA, ” which is codified at 29 U.S.C. § 1132(a).[1] Defendant's Motion to Stay Proceedings and Compel Arbitration (doc. no. 11) at Ex. 1. The parties do not dispute that the contract and this mandatory arbitration provision are enforceable. Instead, the dispute raised by this motion turns on the scope of the arbitration agreement and whether the last of Desselle's claims, her denial-of-benefits claim, falls into the exception to the agreement.[2]



         As a contract involving commerce, the parties' arbitration agreement is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16. The Supreme Court has interpreted § 2 of the Act, which mandates enforcement of agreements to arbitrate, to reflect a “liberal federal policy favoring arbitration.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). However, “the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, ” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995), and parties may “agree to limit the issues subject to arbitration.” AT&T Mobility LLC, 563 U.S. at 344 (citation omitted). Because arbitration is “a matter of contract ... courts must place arbitration agreements on an equal footing with other contracts ... and enforce them according to their terms.” Id. at 339 (citations omitted).


         In her complaint, Desselle asserts three claims: interference, retaliation, and wrongful denial of benefits. The first two claims are bought under the ERISA provision that makes it unlawful to “discharge ... a participant ... for exercising any right to which he is entitled under the provisions of an employee benefit plan.” 29 U.S.C. § 1140. The parties agree that the interference and retaliation claims are subject to their binding arbitration agreement.

         The sole issue is whether the terms of the agreement also require arbitration of Desselle's third claim, which alleges wrongful denial of benefits under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), 29 U.S.C. §§ 1161-1168. Desselle asserts that this is “a claim for benefits under section 502(a) of ERISA, ” which, as stated, is codified at 29 U.S.C. § 1132(a), and thus is the type of disagreement explicitly excepted from the arbitration provision.

         The court agrees. First, unlike Desselle's other claims, which seek to enforce rights other than the payment of benefits, this claim alleges a denial of benefits. Ivy Creek itself characterizes this claim as alleging that “health insurance benefits for her son's surgery were denied ....” Defendant's Brief (doc. no. 23) at ¶ 4. The remedy Desselle seeks in this claim is ...

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