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.

The following bills relating to alternative dispute resolution were introduced by the 113th U.S. Congress. The session convened in Washington, D.C. on January 3, 2013 and will end on January 3, 2015. Click on the bill number to read its text and on the status link to find the bill’s most recent legislative action. Bills that passed: Sandy Recovery Improvement Act of 2013. Amends Title IV of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and requires that alternative dispute resolution procedures, including binding arbitration, be established to resolve any questions related to who is eligible for disaster relief assistance. H.R.152; Status. Bills currently pending: Labor Relations First Contract Negotiations Act of 2013. Amends the National Labor Relations Act to require mediation and, if necessary, binding arbitration of initial contract negotiation disputes. H.R.169; Status. Medical Care Access Protection Act of 2013. As introduced, the bill seeks to implement health care liability reforms and limit contingency fees based on the amount of a damages award whether received through “judgment, settlement, mediation, arbitration, or any other form of alternative dispute resolution.” S.44; Status. Agriculture Reform, Food, and Jobs Act of 2013. Prohibits any requirement that a farm borrower “waive any right under the mediation program of any State.” S.10; Status. Violence Against Women Reauthorization Act of 2013. Prohibits any entity that supports families in the justice system from requiring “mediation or counseling involving offenders and victims being physically present in the same place, in cases where domestic violence, dating violence, sexual assault, or stalking is alleged.” S. 47; Status. Protecting Employees and Retirees in Business Bankruptcies Act of 2013. Amends an exception from automatic stay of pay provision with regard to executive compensation following a business bankruptcy to include “commencement or continuation of a grievance, arbitration, or similar dispute resolution proceeding established by a collective bargaining agreement that was or could have been commenced against the debtor before the filing of a case under this title, or the payment or enforcement of an award or settlement under such proceeding.” H.R. 100; Status. Stay tuned to Disputing for more legislative updates!

The American College of Healthcare Executives is offering five education seminars in 2013 of interest to healthcare mediators: Managing Conflict, Confrontations and Disputes. Seminar leaders are David Maxfield and Stacy D. Nelson, EdD. The course builds on skills and techniques of the best-selling books Crucial Conversations, Crucial Confrontations and Influencer: The Power to Change Anything. Conflict Management, Alternative Dispute Resolution and the Cost-Effective Use of Legal Services. Seminar leaders are Lisa D. Vandecaveye, JD and G. Thomas Sullivan, JD. The seminar is an introduction to ADR and provides attendees with an understanding of The Joint Commission standard that mandates hospitals have a dispute management process. Toxic Behaviors in Healthcare: Creating Systems of Respect to Impact theDouble Bottom Line. Seminar leaders are Mitchell E. Kusy, PhD and Elizabeth L. Holloway, PhD. The session examines the effects of disruptive behavior on staff performance and patient safety and reviews a feedback technique to modify disruptive behavior. A Review of Health Law: 2013 Update. This online seminar is led by Sarah F. Fontenot, JD and describes legal implications of healthcare reform. Compelling Communication: Creating Engagement, Understanding and Results. Seminar leader is Craig Deao. The course teaches communication skills to produce consensus, ownership and results.

It looks like Lance Armstrong’s legal troubles in connection with his use of performance enhancing drugs and other measures to secure seven Tour de France victories are far from over. Last fall, the International Cycling Union released its decision to recognize the USADA’s findings against Armstrong. In the decision, all of Armstrong’s competitive results achieved after August 1, 1998 were disqualified. In addition, United States Justice Department officials are reportedly considering whether to join a federal whistleblower lawsuit aimed at clawing back about $35 million in United States Postal Service sponsorship money. Now, two men who reportedly purchased non-fiction books written by Armstrong have now filed a fraud lawsuit in a U.S. District Court in California. In their lawsuit, the two allege they never would have purchased the best-selling books if they were aware of the truth about Armstrong’s cheating. The lawsuit seeks class action status to represent all individuals who bought Armstrong’s allegedly non-fiction books titled “It’s not about the Bike,” and “Every Second Counts.” Intrigued? Read more about the case at ABA Journal.