The Houston [1st] Court of Appeals has held a party to a transportation worker employment contract waived any challenges to the application of the Federal Arbitration Act (FAA) “by invoking it in the trial court.” In Morris v. Thomas Petroleum, No. 01-09-01065-CV, (Tex. App. – Houston [1st], March 3, 2011), Thomas Petroleum, Inc. and Thomas Fuels, Lubricants and Chemicals (collectively, “Thomas”) appealed a trial court’s confirmation of an arbitral award rendered in favor of Gregory Morris. Morris, a former truck driver for Thomas, was discharged after being stabbed by a fellow employee following a dispute about a truck assignment. Morris filed a lawsuit against Thomas for wrongful termination, defamation and negligence. Thomas then filed a motion to compel arbitration based on the parties’ employment contract, which the trial court granted. After a three-party arbitral panel found in favor of Morris, he sought to confirm the award in the trial court. The court confirmed an award of “substantial damages, attorney‘s fees, and costs,” but denied Morris’ request for pre- and post-judgment interest. Thomas appealed and Morris cross-appealed solely on the issue of interest. On appeal, Thomas argued the FAA did not apply to the parties’ employment agreement. The arbitration provision in the employment agreement, recites that it is binding on every Thomas employee. Continued employment with Thomas is contingent on each employee‘s agreement that he is bound by its terms. The parties agreed to submit any employment disputes that they could not resolve through mediation to the American Arbitration Association (AAA) for resolution. And continued, The award rendered by the arbitrator(s) shall be final, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. All parties stipulate and agree that [Thomas] is engaged in interstate commerce and that the enforcement of this arbitration agreement shall be governed by the U.S. Arbitration Act, 9 U.S.C. § 1, et seq. The employment agreement also provided “for a limited contractual “right of appeal” if the arbitration award exceeds $50,000 or provides for injunctive relief.” Thomas also claimed the trail court erred by applying a more deferential standard of review as called for by the FAA rather than the more stringent standard included in the agreement. The court addressed the issue by stating, The parties expressly stipulated in the agreement that the FAA governs their dispute. The United States Supreme Court has held that parties may not contractually agree to a more stringent standard of review in arbitration agreements governed by the FAA; the statutory grounds for judicial review of arbitration awards are exclusive. Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 585–86, 128 S. Ct. 1396, 1404–05 (2008); accord Petroleum Analyzer Co. LP v. Olstowski, No. 01-09-00076-CV, 2010 WL 2789016, *12 (Tex. App.—Houston [1st Dist.] Jul. 15, 2010, no pet.) (mem. op.). Next, Thomas argued the FAA did not apply to Morris because he was a transportation worker “exempt from the FAA‘s purview, negating the parties‘ express stipulation that the FAA applies to their dispute.” The court responded, When there is an express agreement to arbitrate under the FAA, we previously have upheld such choice-of-law provisions even when the transaction at issue does not involve interstate commerce. The Houston Court of Appeals continued, We need not reach the merits of the questions that Thomas poses in this case—specifically whether Morris‘s former position is one that falls within the category of transportation workers or whether a party whose status otherwise renders him exempt from the FAA‘s purview can expressly contract for its application. We agree with Morris that Thomas has waived any objection to the FAA‘s application to this dispute by invoking it in the trial court. According to the court, Thomas waived any complaint about the enforcement of the agreement under the FAA as the agreement expressly provides. Thomas sought to compel arbitration under the agreement at the same time it filed its original answer and filed a verified plea in abatement, expressly invoking the FAA. Once in arbitration, Thomas also prosecuted a counterclaim against Morris. Thomas‘s insistence on having the dispute arbitrated to its conclusion before a three-member panel resulted in a considerable investment of time, energy, and expense, to Morris‘s detriment. We therefore conclude that Thomas waived its objection to the agreement‘s application by substantially invoking the FAA and the arbitral process. Finally, the Houston Court of Appeals rejected Morris’ cross-appeal seeking pre- and post-judgment interest on the arbitral award because the “trial court lacked the authority to modify the award by adding pre- or post-judgment interest,” since the agreement was “silent on the issue of interest on an award and the arbitration panel did not include any interest.” Additionally, The FAA does not address pre- and post-judgment interest on an arbitrator‘s award, so Morris is not automatically entitled to pre-judgment interest under the FAA. See id. (citing 9 U.S.C. §§ 1–307). Nor is Morris entitled to pre- or post-judgment interest under the Texas Finance Code absent an award from the panel. The Texas Finance Code provides that monetary judgments for personal injury earn pre-judgment interest, but that provision applies to judgments rendered by courts, not to awards rendered by arbitrators. See TEX. FIN. CODE ANN. § 304.102 (Vernon 2006). Post-judgment interest is likewise unavailable. See TEX. FIN. CODE ANN. § 304.001 (Vernon 2006) (post-judgment interest provision applies to “money judgment of a court in this state”). The Houston Court of Appeals affirmed the ruling of the trial court and held “Thomas waived its challenge to the FAA‘s application and failed to identify any ground for vacatur under the FAA.” The court also held “the trial court properly refused to award pre- or post-judgment interest in its judgment confirming the arbitration award.” Technorati Tags: arbitration, ADR, law

The Northern District of Texas has issued a Temporary Restraining Order enjoining multiple arbitration proceedings before the Financial Industry Regulatory Authority (FINRA). In Billitteri v. Securities America Inc., et al., No. 3:09-CV-01568-F and related cases, (N.D. Tex., February 18, 2011), a group of representative plaintiffs in a class action lawsuit jointly filed a Motion for Preliminary Approval of a partial class action settlement with settling defendants from the financial services industry. The representative plaintiffs also filed a Motion for a Temporary Restraining Order to enjoin three scheduled FINRA arbitration proceedings because the plaintiffs in the arbitration proceedings were also members of the proposed class. The representative plaintiffs cited the All Writs Act, 28 U.S.C. § 1651(a), and claimed that allowing the scheduled FINRA arbitrations to proceed would require the settling defendants to expend monies needed for the proposed settlement on defending the arbitrations. The settling defendants did not oppose the plaintiffs’ Motion. According to Judge Royal Furgeson, In a complex class action such as this one, district courts have been ruled to have the authority to stay proceedings taking place elsewhere “in aid of their respective jurisdictions” to assist the courts in the complex task of ensuring resolutions to the claims before it. See In re Baldwin-United Corp., 770 F.2d 328, 338 (2d Cir. 1985) (“An important feature of the All-Writs Act is its grant of authority to enjoin and bind non-parties to an action when needed to preserve the court’s ability to reach or enforce its decision in a case over which it has proper jurisdiction.”); see also United States v. New York Tel. Co., 434 U.S. 159, 174 (1977) (“The power conferred by the Act extends, under appropriate circumstances, to persons who, though not parties to the original action or engaged in wrongdoing, are in a position to frustrate the implementation of a court order or the proper administration of justice . . . , and encompasses even those who have not taken any affirmative action to hinder justice.”) (citations omitted). The Northern District of Texas issued a Temporary Restraining Order to preserve the status quo while the court considered whether to approve the proposed settlement. The court also noted that it would consider the appropriateness of using the All Writs Act to enjoin arbitration proceedings when it decided the parties’ Motion for Preliminary Approval. The next hearing is scheduled for March 18, 2011. Although the FINRA forum does not provide for class action claims, customers of brokerage firms generally may opt out of a class action lawsuit in favor of FINRA arbitral proceedings. Because the Northern District of Texas has temporarily enjoined FINRA arbitration proceedings under the All Writs Act, this case could potentially have a substantial limiting effect on the availability of the FINRA arbitral forum in the future. You may read New York Times coverage of the case here. Technorati Tags: arbitration, FINRA, News, securities arbitration

The California Office of Health Information Integrity (CalOHII) has published proposed regulations for its electronic health information exchange (HIE) demonstration projects. According to CalOHII’s Initial Statement of Reasons, such projects “will test policies and rules to better inform the State and health care stakeholders while the HIE infrastructure is being defined over the next several years. By allowing for various HIE demonstration projects, it will be possible to determine how best to protect privacy in accordance with State and Federal laws while enabling electronic health information exchange.” The State of California was awarded $38.8 million dollars under the American Recovery and Reinvestment Act in order to develop the projects. The Request for Application states, Demonstration project participants will be testing electronic HIE privacy and security policies that will not only address the feasibility of implementation and gauge the implementation impact, but identify the need for standardization across all participating health care entities as the Participants gauge the impact of the policies. Participation in the demonstration projects will provide the Participants with clarification on privacy and security issues, protection and mitigation of legal risks, and the structure to facilitate valuable and appropriately safeguarded testing of policies within the demonstration projects regulations. This will allow the Participants to be engaged in the most advanced electronic exchange of health information environment in California as the State looks to the future. By helping to develop implementation strategies consistent with the demonstration projects regulations, participating entities will be contributing to inform the CalOHII and HIE stakeholders on the critical privacy and security policy issues, identifying new and innovative privacy and security practices that enhance consumers trust and confidence with electronic exchange of health information. Results from the demonstration projects will inform the California legislature of the outcomes, best practices, and the need for harmonization with federal privacy and security law. Additionally, For calendar year 2011, CalOHII is seeking demonstration project participants that will propose comprehensive implementation strategies for the identified demonstration project. The goals of each demonstration project will include: • Determine operational feasibility of implementing the policy; • Determine operational feasibility of implementing an electronic HIE process; • Discover issues associated with the operationalization of the policy; and • Develop and propose policy solutions. CalOHII will, in the future, seek participants for demonstration projects, as allowed through AB 278, for calendar years 2011, 2012, 2013, and 2014. Applications to participate in the 2011 demonstration projects are due March 7, 2011. The full text of the proposed regulations is available here. CalOHII will accept written comments on the proposed regulations until April 1, 2011. Disputing previously discussed some of the issues related to the utilization of electronic health records here and here. Technorati Tags: Healthcare

by Holly Hayes The February 2011 American Health Lawyers Association (AHLA) Connections magazine lists the “Top Ten Health Law Issues in a Reformed Healthcare System 2011.” Healthcare reform law passed in 2010 prompted the AHLA to change the focus of their annual “Top 10” article for 2011. Former “Top 10” issues amended by healthcare reform and some new topics that emerged by the passage of the legislation are included in this year’s list (details of each topic are listed here): 1. Constitutionality of the Individual Mandate – Peter Leibold, AHLA 2. Accountable Care Organizations – Bianca Bishop, AHLA 3. Fraud and Abuse and Program Integrity – Bianca Bishop, AHLA 4. Medicare Payment Modifications – Rebecca L. Burke, Powers Pyles Sutter and Verville PC 5. Medicare Physician Payment: The Sustainable Growth Rate Formula – Bianca Bishop, AHLA 6. Delivery System Reforms – Cynthia Conner, AHLA 7. Medical Loss Ratio Requirements – Arthur N. Lerner, Crowell & Moring LLP 8. Physician Employment – Cynthia Conner, AHLA 9. Insurance Reform and Medicaid Expansions – Katherine J. Hayes, Associate Research Professor, George Washington University, Department of Health Policy 10. EMR/HIT/HIPAA – Alan S. Goldberg, Attorney and Counsellor at Law Let us hear your thoughts on any of these topics. Technorati Tags: Healthcare, Mediation Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at holly@karlbayer.com.