The Physicians Foundation identified five issues likely to significantly impact physicians and patients in 2013. The 2013 Watch List is based on research undertaken by the Foundation in 2012 including the 2012 Biennial Physician Survey, the 2012 Next Generation Physician Survey, and the 2012 US Healthcare Highway Report.

On January 29th, a unique case was filed in Dallas County. In Parallel Networks, Inc. v. Jenner & Block, LLP, a former client of the law firm filed a motion to vacate an arbitral award of $3 million in attorney fees. In the case, Jenner & Block represented Parallel Networks on a contingency fee basis in a lawsuit against Oracle. After losing a motion for summary judgment, the law firm reportedly determined that Parallel Networks was unlikely to win a large financial award and withdrew from representing the company. The parties’ representation agreement stated any disputes over attorney fees would be subject to arbitration. With the assistance of new counsel, Parallel Networks later settled the disagreement with Oracle for $20 million. After the case settled, Jenner & Block sought in excess of $10 million in attorney fees from Parallel Networks for the work previously performed by the firm. Pursuant to the parties’ representation agreement, the fee dispute was arbitrated and Jenner & Block received a $3 million award. Parallel Networks now argues the award should be vacated because the arbitrator “exceeded his powers” and Texas law prohibits a contingent fee attorney from seeking further compensation from a client after the relationship is ended based solely upon economic reasons. It will be interesting to see how the court rules. Thanks to Dennis Crouch at PatentlyO for bringing this case to our attention. Stay tuned to Disputing for more updates on this case.

Charles B. Craver, Freda H. Alverson Professor of Law at the George Washington University Law School recently published a thought-provoking article entitled The Use of Alternative Dispute Resolution Techniques to Resolve Public Sector Bargaining Disputes, Ohio State Journal on Dispute Resolution, Vol. 28, p. 45, 2013. In his article, Professor Craver examines the growing use of alternative dispute resolution techniques in public sector bargaining disagreements. Here is the abstract: Labor organizations and employers have used various dispute resolution techniques to assist them with contract negotiations and contractual grievances. They have used negotiation, mediation, and arbitration since the 1800s. When the ADR movement was developed for conventional legal disputes, many of the techniques adopted were derived from the industrial relations movement. As states enacted public sector bargaining laws granting representational rights to state and local government employees, the parties had to determine how to resolve controversies over the terms to be included in new contracts and over grievances arising under existing accords. Most states refused to allow government personnel to strike, and even states that did permit such work stoppages banned them by essential workers. As public sector disputes began to create problems for bargaining parties, they started to focus on newly recognized ADR techniques, such as mediation and binding arbitration. In the end, many have incorporated the very techniques which private sector labor parties had created decades earlier. The full text of the article is available to download (without charge) from Social Science Research Network. As always, we welcome your thoughts and comments.

A federal appeals court has ruled that two Wall Street brokerages must arbitrate a $234 million auction rate securities claim in a dispute with a healthcare organization over what exactly constitutes a customer. In January, a panel of the United States 4th Circuit Court of Appeals held that Carilion Clinic was a customer of UBS AG and Citigroup, Inc. pursuant to the Financial Industry Regulatory Authority‘s (FINRA) securities arbitration rules. In UBS Financial Services, Inc. v. Carolion Clinic No. 12-2066 (4th Cir. Jan. 23, 2013), Carilion reportedly issued at least $234 million in auction rate securities on the advice of the two brokerage firms in 2005. The firms also purportedly purchased and resold the securities to other customers. Auction rate securities are liquid short-term investments that generally enjoyed a higher rate of return until the recent economic crisis. In 2008, Carilion allegedly lost millions when the $330 billion auction rate securities market failed. The healthcare organization was also reportedly on the hook for the high interest rates normally paid to investors who purchase such securities. Because FINRA requires that member brokerage firms arbitrate any claims made by customers, UBS AG and Citigroup Inc. argued Carilion was not a customer and instead sought judicial review of the case. The two brokerage firms relied on a 2001 case in which the term “customer” was interpreted by a federal court to include a “brokerage account or investment relationship.” Although FINRA’s definition of customer is vague, the organization only states that a customer may “not include a broker or dealer.” The 4th Circuit disagreed with UBS AG and Citigroup Inc. and held that Carilion was in fact a customer of the two brokerages. Finally, the appellate court dismissed the brokerage firms’ argument that the parties agreed to forego arbitration and litigate any disputes in a New York court by stating a contract between them was not specific enough to lead a reader to believe the right to FINRA arbitration was waived. Consequently, the forum selection clause “did not displace UBS and Citi’s arbitration obligation.” The appeals court then affirmed the district court’s judgment.